November 25, 2008
Quote from the Washington Post; “When Countrywide Financial felt pressured by federal agencies charged with overseeing it, executives at the giant mortgage lender simply switched regulators in the spring of 2007. The benefits were clear: Countrywide’s new regulator, the Office of Thrift Supervision, promised more flexible oversight of issues related to the bank’s mortgage lending. For OTS, which depends on fees paid by banks it regulates and competes with other regulators to land the largest financial firms, Countrywide was a lucrative catch.”
The man at the head of the OTS was James Gilleran. That’s him holding the chain saw. What’s he doing with the chain saw? He’s “cutting red tape for the financial industry, chopping away regulations, abolishing restrictions”. His four friends in the photo are heads of other regulatory agencies. The photo was taken in 2003 “to highlight the Bush administration’s commitment to reducing regulation”.
Gilleran was appointed to the office of OTS in 2001 by his boss, then Treasury Secretary Paul O’Neill, a Bush appointee. He had been a heavy contributor to Republican candidates running for office. In his job, Gilleran oversaw thrifts & thrift holding companies worth more than $1 trillion in assets. Does that particular number ring a bell? Two other big banks that failed under the watchful eye of the OTS was IndyMac and Washington Mutual. I’d say OTS is really on top of everything, wouldn’t you?
In the mist of a financial crisis that may very well bring down our country, we still have a huge number of folks insisting that we don’t need more regulation. You know, for the first time, I may agree with them. What good would it do if we put people like James Gilleran in charge of those regulatory offices? However, if we put people in charge of those existing agency’s who couldn’t be bought off with money or political favor, we wouldn’t need more regulation. Right?
The Washington Post article hyperlinked above is quite lengthy, but well worth the read should you be interested in why it all really went wrong; greed & corruption.
Never underestimate the difficulty of changing false beliefs [with] facts.
Economist Henry Rosovsky