Broad overhaul of regulators needed

One point is perfectly clear after the subprime debacle, which is the need for federal-level regualtors that will actually do something. Finger pointing is frustrating for consumers and mortgage holders. Recently we received a report of a mortage holder who was bounced from the OCC to the FTC, later to be told that the FTC gathers complaints but does not take action on individual complaints.

Blame has been placed on liar loans, lax lending standards, and one report blames government regulations aimed at urban revitalization. Others say a requirement for banks to make loans to low income people in target areas amounts to legal redlining. However, banks that priced on risk alone, without regard for pressure from community activists, seemed to have fewer subprime losses. Wells Fargo is one such bank. Like them, love them, or hate them, but Wells Fargo did much better than HSBC and Citigroup, for instance.

It is time for the childish finger pointing to stop. One of our articles asked the question “What did the government promise bankers to look the other way?” Bankers deny responsibility, while to gevernment does too. Blame once again falls on the working class, greedy mortgage brokers, and many others. States enacted anti-predatory lending laws, only to see them overturned and pre-empted at the federal level, while federal regualtors slept.

A sweeping proposed overhaul of U.S. financial regulation is to be unveiled by Treasury Secretary Henry Paulson on Monday, according to reports. Perhaps the UK should serve as a model, but one must remember what happened to Northern Rock. Even a strong centralized regulator can be taken by surprise, but the American system is clearly broken. The question in the United States is whether regulators intentionally did nothing, or is the system broken?

There is no defense when an entity sends over 200 complaints, documented and detailed by state, with clearly established illegalities and violations – and nothing happens. No reply, no action, no help for the consumer – just passing on the problems and finger pointing. These are our tax dollars at work. Waste, fraud, and abuse at the government level seems to have been passed on the the consumer level. We agree with Paulson and a change is needed.