Mortgage Crisis Daily

Some analysts say federal regulators were asleep while infighting caused lack of regulatory action. The final result was felt worldwide and perhaps could have been avoided. President George W. Bush believed his advisors, thus signing into law a new bankruptcy bill, class action restrictions, postal service reform, and other laws which do not help the consumer. Credit card issuers and mortage lenders took immediate advantage of postal service reform. Don’t mail a statement to the customer and the customer cannot prove anything. Bankruptcy reform ultimately turned out to be unwarranted in that 95 percent of those declaring bankruptcy were not perpetrating fraud.

Trends pointed to mandatory binding arbitration while new class action restrictions, thanks to Bush, forced state regulators to take over enforcement. Remember, if you will, that Household International and Ameriquest predatory lending charges were not federal, brought instead by state attorney’s general. Federal oversight by the Office of the Comptroller of the Currency (OCC) was lacking. The national and regional headquarters for both IRS and OCC are located in the same cities, as are most district offices. Generally, IRS appeals offices and OCC offices are co-located. The OCC has no employees co-located with the IRS’ service centers. At various locations, OCC and IRS employees share such resources as conference rooms, libraries, and copier and fax machines. There is interaction between OCC employees and certain IRS employees where an integration of work function exists, especially when preparing for Tax Court cases. OCC attorneys provide advice and representation to both the OCC and IRS.

A large number of complaints were submitted to the OCC pertaining to HSBC, Household International, and Ameriquest. During that period Julie Williams was in charge at the OCC, taking the position as a temporary role when her predecessor retired. In reply to charges of predatory lending Williams stonewalled by saying there were no predatory lenders under the regulatory control of the OCC. The statement turned out to be false. During the same time frame the federal government worked to overturn state anti-predatory lending laws, saying such laws were invalid because institutions were federally regulated. Regulation turned out to be lacking as infighting continued.

This reporter talked to a representative of the OCC. I learned that the OCC did not know how to control Household International and HSBC Finance Corporation. Investigations were stonewalled by the bank, and when all else failed, the OCC was told the final level of enforcement was at the state level as it pertained to second mortgages, first mortgages, or credit cards. The Securities and Exchange Commission (SEC) has primary responsibility for enforcing the federal securities laws and regulating the securities industry/stock market. The SEC was more proactive than the OCC, issuing cease and desist orders against Household International.

In conclusion I suspect bankruptcy and class action changes were no accident. To stimulate the economy the Bush administration allowed financially irresponsible actions with no fear of regulatory oversight. David Gibbons moved from the OCC to HSBC Finance. Alberto Gonzales fired attorneys, and ultimately lost his job. Mortgage lenders and credit card companies, often owned by the same banks, invented volitile lending vehicles. Asset backed securities were sold around the world. At the state level frustration continued to grow, and the Ameriquest predatory lending settlement only went forward because Bush wanted to appoint Ameriquest’s Arnall as the ambassador to The Netherlands.

The mortage crisis and the subprime crisis perhaps was not the result of lending to people who could not afford the payments. The crisis came about because every citizen expects the protections afforded by federal, state, and local governments. Complaints were filed but nobody did anything. Like the robber barrons of old and organized crime of today, when law enforcement is nowhere to be found the situation only gets worse as perpetrators get bold and inventive. Mortgages and credit cards are not the only areas infected. Just look at oil $100 a barrel and a weak dollar. Like trying to control a herd of rats and rabbits Bush thought it was possible but severly underestimated the disloyalty and self-serving nature of the industry. With skeletons in the closet and coverups like the Skooter Libby and Valery Plame Wilson issues Bush simply sacrificed the American people, and people around the world, for his own self-serving desires.

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The Subprime Mortgage Crisis Before, During, and After

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