Thursday, April 15, 2010

Enterprise: CRA awarded WaMu and Other Failures

I've got a post over at the Enterprise blog today about awards given by compliance agents for the Community Reinvestment Act. In several instances the awards went to firms who have since failed. Most notably 2003 winner Washington Mutual produced the largest bank failure in American history.

This morinng I attended a Congressional subcommittee hearing where the many benefits of CRA were extolled. CRA, according Chairman Gutierrez (D-IL), several expert witnesses, and most members of the majority, had no role in the financial crisis. I don't argue about the role that CRA played other than to say that CRA regulators were just as blind as many other private and government actors to the coming financial crisis during the boom years. Just as private players congratulated their "quants" for banishing risk and creating complex deviates with little thought to the long-term consequences, CRA officials gave the improper of government endorsement to "innovate" programs only to have to watch the managing firms falter.

Thursday, April 1, 2010

Enterprise: Bernanke's Room is Ready

I've got a post this afternoon over at The Enterprise blog on the Fed's release of financial data from all three Maiden Lane facilities.

I've already been told it's outrageous that the regional Fed banks spend all this taxpayer money on conferences. The cost maybe outrageous but it's not technically taxpayer money. The regional Fed banks are not actually government agencies. The Federal Reserve Board is but the banks are funded by commercial banks in their districts. We could call the fees that commerical banks pay an indirect tax on consumers but they are not directly your money. Plus the commerical banks get to sit on the Regional Feds' boards in exchange for their fees.

A bit of this could change under Charmain Dodd's bill. More on that later.