SIMON JOHNSON: OCC SELLS OUT TO BANKS: CONSUMERS DON’T COUNT

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CONSUMERS DON’T COUNT

EDITOR’S COMMENT: Fascism is a system in which the government is essentially run by business. The premise of fascism is that successful commerce (as measured by the government that is controlled by business) leads to a successful society. Italy tried it and we know what happened there. Like anywhere else,  including the United States, without the government being the referee in the marketplace, it is only BIG BUSINESS that succeeds — leaving small business, entrepreneurs, innovation, and consumers to eat dirt.

When regulators know their next job, and their future prospects will come from the banks they are regulating they essentially submit themselves to the control of their future employers. That is what has happened in banking. That is what has happened with our government. And that is why the elephant in the living room is being ignored.

The current PLAYBOOK of the banks, duly followed by most regulators and virtually all members of congress and virtually all legislatures around the country (except Hawaii?), is looking for a way out of the mortgage mess by having regulators intervene in what is essentially state law and what has clearly been gross negligence at best, and malfeasance or criminal activity on the part of the banks at worst. The victims are clearly identified — investors who bought the falsely valued mortgage bonds that were nothing like what was described and homeowners who bought the falsely valued loan products based upon falsely valued real estate in deals that were nothing like what was described.

In short, the Banks wish to use their unbridled control over government and in particular the regulators, to redefine banking, risk law and morality so that they can escape the criminal prosecution that followed the savings and loan scandal of the 1908’s where over 800 bankers went to jail. (yes that’s right, as a class, they have a prior criminal record, so this time their punishment should be worse).

While the main action is in court where the banks are losing ground every day just by looking at the truth, the facts, the evidence and the results of their mean-spirited creation of the illusion of securitization, citizens (consumers, past and present) must be ever vigilant and raise hell when they are doing something that is plainly bad for the country and bad for our children and grandchildren. Let your representatives and the regulators know in writing that you don’t approve of the job they are doing regulating the banks or in the handling of the foreclosure crisis which now looks like it will persist for decades.

The goal is NOT to preserve the health of the banks at all costs. The goal, as clearly set forth in our constitution and in case law going back centuries, is to protect and serve the members of the society that have agreed to a form of governing themselves. If that goal changes, then government is spurious. Government becomes our jailers instead of our protectors and if they won’t protect us against financial terrorism and we let them, what is to prevent them from deciding that it is “best for the country” (meaning themselves) to cease protecting us from anything else, including military threat.

May 19, 2011, 5:00 am

When Regulators Side With the Industries They Regulate

By SIMON JOHNSON
Today's Economist

Simon Johnson, the former chief economist at the International Monetary Fund, is the co-author of “13 Bankers.”

The Office of the Comptroller of the Currency is one the most important bank regulators in the United States — an independent agency within the Treasury Department that is responsible for “national banks” (for more on who regulates what in the United States, see this primer).

Over the last decade, the Office of the Comptroller of the Currency repeatedly demonstrated that it was very much on the side of banks, for example with regard to fending off attempts to impose more consumer protection. (James Kwak and I covered this in “13 Bankers,” and those details have not been disputed by the agency or anyone taking its side.)

After suffering some serious and well-deserved loss of prestige during the financial crisis of 2007-9, the comptroller’s office survived the Dodd-Frank reform legislation and is now back to pushing the same agenda as before. In its view and that of its senior staff — including key people who remain from before the crisis — the “safety and soundness” of banks requires, above all, not a lot of protection for consumers.

This is a mistaken, anachronistic and dangerous belief.

Probably the most egregious mistake made by the Office of the Comptroller of the Currency during the subprime boom was to push back against state officials who wanted to curtail malpractice in housing loans, including predatory lending.

The comptroller’s office ultimately lost that case before the Supreme Court, but its delaying action meant that an important potential brake on abuse and excess was not available — which contributed to the worst business practices that took hold in 2006 and 2007 (see this nice summary or Eliot Spitzer’s account).

Naturally, post-debacle the Office of the Comptroller of the Currency talks an ostensibly better game but, as Joe Nocera put it, “it sure looks as though the country’s top bank regulator is back to its old tricks.” In discussions regarding a potential settlement on mortgage foreclosures — and how they have been handled — the comptroller’s office has supported an outcome that is more favorable to the banks (see the Nocera column for more details).

Now it is again insisting that federal regulation pre-empts the ability of states to regulate in a way that would protect consumers.

In a letter on May 12 to Senator Thomas Carper, Democrat of Delaware, the agency asserted that its pre-emption regulations are consistent with the Dodd-Frank Act (see this interpretation by Sidley Austin, a law firm, which I draw on). There is a lot of legalese in the letter but the basic issue is simple — are states allowed to protect their consumers vis-à-vis national banks, or do they have to rely on the Office of the Comptroller of the Currency, despite its weak track record?

The comptroller’s office is clear — the states are pre-empted, meaning that national comptroller regulations will always overrule them on the issues that matter. (As a technical matter, the issue comes down to what is known as visitation: whether state-level authorities can gain access to bank documents if the bank or the comptroller’s office has not already determined that there is a problem.)

The American Bankers Association was, not surprisingly, delighted: “The O.C.C.’s action helps clarify the rules of the road for national banks and how they serve their customers.”

Richard K. Davis
, chief executive of U.S. Bancorp and then chairman of the Financial Services Roundtable, a powerful lobbying group, emphasized the importance of the pre-emption issue to national banks in March 2010, during the Dodd-Frank financial reform debate in the Senate: “If we had one thing to fight for, it would be to protect pre-emption.”

It is hard to know which would seem more incredible to a second grader: that we left in place the same agency that was responsible for a significant part of past misbehavior, or that this agency seems determined to continue with the same philosophy and policies.

The problem is not that the Office of the Comptroller of the Currency sees its primary duty as the “safety and soundness” of the financial system. Rather, the danger to the public arises because it has consistently taken the view that the best way to protect banks — and keep them out of financial trouble — is to allow them to be harsh with consumers.

This is worse than short-sighted — it completely ignores all externalities, such as how business practices and ethics evolve, and it pays no attention to even the most basic macroeconomic dynamics, such as the fact that we have a credit cycle during which we should expect lenders to “race to the bottom” in terms of standards.

The Office of the Comptroller of the Currency should have been abolished by Dodd-Frank. Unfortunately, it is too late for Congress to revisit this issue. President Obama should at the very least nominate a new head of the Office of the Comptroller of the Currency — the job has been open since August of last year — and a serious reformer could make a great deal of difference.

Under its current leadership and with its current approach, the Office of the Comptroller of the Currency is putting our financial system into harm’s way. The lessons of 2007-9 have been completely lost on it. As Talleyrand said of the Bourbons, “They have learned nothing and forgotten nothing.”

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35 Responses

  1. I am learning the hard way that the Federal Regulators; OCC, FTC, and SEC are not out to protect the rights of consumers but it is appearing their intent is to compromise any complaints submitted against the entities they are supposed to regulate. I had a refi back in October 2000 with defunct (July 2001) Superior Bank, FSB, (SB) closed by the Office of Thrift. I, to date, have never received the required notification of SB closing or the identity of new owner of the mortgage. I kept sending my payments to the servicer Fairbanks Capital (FC). I learned of SB closing in 2006/2007 when I began investigating my loan records after seeing the numerous contradictions and documents with false signatures, in particular a TILA reflecting a different loan and interest amount with forged signatures. Note: a satisfaction of mortgage for the ($105,000.00) portion of the alleged CEMA refi of October 2000 was received in August 2002. We have recently determined that legally there should have been a remaining balance of approx. $43,000.00.
    I was Initially advised, after numerous requests, by the alleged servicer/debt collector Select Portfolio Servicing, Inc. (SPS) formerly FC in March 2009 the mortgage holder was LaSalle Bank N.A, (LaSalle) as trustee, in trust for the holders of MLMI Trust Series 2002-ADC1 one year later, March 2010 they reported the mortgage holder was U.S. Bank N.A., (USBANK) as trustee, in trust for the holders of MLMI Trust 2002-AFC1 Asset Backed Certificates, Series 2002-AFC1. Neither Trust is recorded with the SEC. My complaint to the OCC reflected these facts and challenged the failure of (USBANK) requirements to respond to a Qualified Written Request (QWR) and notice of rescission (NOR). USBANK failed to respond to the QWR and NOR instead forwarded the requests to SPS without acknowledging their receipt.
    I believe that the fact the Trust is non-existent and USBANK failed to respond to a QWR and NOR is certification of their lack of standing and intent to assist SPS in their fraud. These facts being true the OCC should have been all over USBANK for numerous banking violations and fraud. Instead, the OCC response is obviously attempting to cover up and palliate USBANKS actions. See the OCC response to the complaint http://www.scribd.com/doc/55125678 also see my request for a review/appeal of their findings. http://www.scribd.com/doc/55125679
    Beware; the OCC does not acknowledge receipt of an appeal to their findings. I sent my appeal via USPS Priority with delivery and signature verification on April 23. 2011, to date, there is no record of delivery. I did fax a copy on April 28th 2011 and received verbal confirmation from an OCC operator on May 2, 2011 who reported both appeal letters on file. Is this a sign of collusion between the USPS and the OCC?

  2. Saturday 21 May 2011

    cubed2k:

    The first video does not substantiate the premise,
    however much one wants to “believe” the “sentiment.

    The second video misses the point entirely by making
    constant reference to the “dollar.” He does not know
    the definition of what a dollar is, and it is an adjective,
    not a noun. Despite the word “dollar” appearing on
    fiat FEDERAL RESERVE NOTES, they are NOT dollars.

    Fiat FRNs are commercial debt instruments. By law, debt cannot be money, yet most everyone in this
    country accepts these commercial debt instruments
    as “money.” I mention cognitive dissonance on
    occasion, and I am willing to bet few look up the
    meaning, and for those who do, their curiousty stops
    right there. The lies told have been so ingrained
    that when the truth comes out, it is not “believed.”

    There will not be any “bailout” of banks by the government.
    Banks are not manipulating gold, although there have
    been a few Wall Street firms that have been aggressively
    trying to suppress the price of silver, and the “fruits”
    of their “labor” have been exhibited in the decline from
    $50 to as low as $33 area.

    What will happen, and has been happening are that
    the exchanges will reneg on making delivery on the
    underlying physical asset and will “payoff” the holder
    in fiat. Another way, as just happened, is the raising
    of margin to hold paper to levels that most cannot
    afford, and this automatically removes smaller players
    from participating.

    This gentleman is making some “educated” “guesses”
    to back his story, but when one does not even know
    what a dollar actually is, in law, how credible can the story be?

    Cheers!

  3. and another:

  4. Edgetraderplus,

    for you:

  5. a good thing:

    “In Florida, according to Brinkmann, many attorneys no longer handle foreclosure cases; the banks are having trouble finding attorneys to foreclose. ”

    http://finance.yahoo.com/news/Mortgage-delinquencies-cnnm-3016072173.html?x=0

    My fellow Americans, yes you attorneys, do not work for the banks. Thank you very much.

  6. If the entire middle class stopped using credit and just stopped paying their mortgages….Game Over.
    The upper middle class, who also use credit to a large extent to keep up their upper level status are already sliding down the scale towards middle classism and will continue to slide. Most of them, without the use of their credit cards would very quickly start the desent downward. It is just a matter of time. That will leave the elite banksters and coherts as well as fraudstreet with all the moola. Simple economics support the fact that the elite will not or can’t support all of the businesses needed to fund our current economy. This is when you will see a depression none the likes of the last one. Ground Zero is probably what it will take for a complete readjustment and it will be painfull. The US budget has existed on credit and borrowing as has most of its citizens. The one difference is that the government has been complicit in the ponzi scheme whereby the money has been stolen via fraud and those involved have become very wealthy. Their mantra…”take from the poor, by any means necessary and give to the rich”. That’s either a good thing or a bad thing depending on which side of fraudstreet you reside. When my problems started my credit score was 765. Now it is in the negative numbers…do know how far below zero it can go, but it will be interesting to find out. Best of all….I don’t give a rat’s $ss!

  7. The head of the International Monetary Fund was indicted for rape…

    American homeowners were raped by the US “money system”…

    WHEN will those indictments come?

  8. Thursday Evening 19 May 2011

    Congrats cubed2K…a major accomplishment. Now,
    close all bank accounts and stay out of equity jurisdiction.
    Then, get rid of the fiat debt issued by the Federal
    Reserve, Federal Reserve Notes that most everyone
    mistakenly calls “dollars” and start buying Silver Eagles, real money.

    A year ago, it took $380 fiat FRNs to buy a roll of 20 1 oz coins.
    Now, it takes near $800 fiat FRNs to buy the same
    1 oz roll of coins, and that is after silver has dropped
    from $50 to $35 recently

    You will experience the reverse effect of having debt.
    Instead of pissing money away into the abyss called
    “interest,” you will see gains in real wealth for you
    and your family.

  9. We are all cash. Our credit FICO score is something like 520. And has been for a 2 years now since I defaulted on anything from a so called bank or financial institution. While I must tell you my wife and I have paying on this credit for years and years. If I just go over in my mind the amount of interest we have paid to these institutions, it is a lot. It is a life times amount of work, with their compound interest, we have paid these institutions over and over again, for the same debt. We are even. We have no credit from these guys. thank you very much, we do not want it anymore. We are happy and we are creating our future w/o the tit of the credit industry. Oh so life is not so serious anymore worried about paying the credit companies. YES, I KNOW WE SIGNED THE DOTTED LINE. SO BE IT, YOU DON”T DO BUSINESS WITH US AND VICE VERSA. HA HA, you credit industry are a public company, wow wow, big deal. You actually need our business, our promise to pay. Guess what, don’t need it anymore.

  10. E. Tolle

    I agree. But, agencies make mistakes. So fast to cover. Whoops.

  11. this is the ONLY thing on this page close to reality.
    we not get over this until it is disassembled & reconstructed without the $ disease.

    edgetraderplus,

    Throughout the history of regulatory agencies, they
    are always “in bed” with those whom they are supposed
    to regulate.
    Cognitive dissonance precludes most Americans
    from seeing the NWO [New World Order] handwriting
    on the wall, in the courts, in business, and especially
    the Federal Reserve.
    ALL politicians are beholding to the system for their
    existence. There is not a more loyal, more insideous
    lot dependent upon the government teat then they.
    As to the people? It is every man, woman and child
    for themselves. Fools are they who believe otherwise.

  12. I am with the above. We need to send all our representatives a message to help the American people, the real victims and to send the criminal to jail. And continue to make sure the officials like McClain and Steel and the judges that are corrupt get noticed in the public. I have been e-mailing and writing all public offices I am aware of and not only my State representatives but also Representatives in other States that it is unacceptable to continue allowing the criminals to be in control to victimize their victims. After all you don’t allow murders and sex predators to control their victims. Criminals are not capable of being honest and fair and deserve no control over their victims. I will gladly take my first time ever steps out to the streets in controlled,organized protests. This is ourtrageous!

  13. Right on, leapfrog—you can’t expect sociopathic materialists—or materialistic sociopaths—to police themselves…!

    A culture of “mutual deceit” is so pervasive on Wall Street and in the banking world, that there must be a total collapse for any real change to happen…

  14. I just got an e-mail from McClintock harping about Dodd-Frank. I turned the tables though and asked him about restoring Glass-Steagall and told him deregulation will not work as the criminal bankster cartels are incapable of policing themselves. I’m sure that corporate-panderer will NOT like my e-mail. Too bad.

  15. http://www.nytimes.com/2011/04/19/opinion/19nocera.html?_r=1

    OCC: Obvious Coddling Co-conspirator

  16. Pamela—ha ha—I personally don’t even care about my credit score anymore—as Dave Ramsey says, it’s just an “I love debt” score!!!! Screw ‘em!

  17. cubed2K: Wow, that’s a great idea! Thanks for the article. Wall Street will kick and scream about this though, won’t they? Full power lobbying attack to block?

  18. usedkarguy: Yes, I regularly email CONgress and give them hell. I have carpetbagger McClintock as my “representative.” He voted yes on HR 3808 (the interstate commerce MERS whitewash) that was luckily vetoed.

  19. Well, wasn’t it that republican Senator Bacchus who stated, “Regulators are here to serve the banks?” I’ll give him this much…at least he’s upfront about it.

    Everyone: Check out Mandelman’s followup to the case of the “corporate seel” or the “disappearing bill” in Arizona. It confirms what we already knew, that the banksters backed up the treachery. I hope you folks in Arizona will not be re-electing the traitorous McLain woman or that rotten and corrupt Seel.

    http://mandelman.ml-implode.com/2011/05/kill-bill-arizona-mortgage-lender%e2%80%99s-association-takes-credit-for-killing-sb-1259/

  20. “The meek shall inherit the earth…”

    Ever really think about how that might happen?

  21. Thursday 19 May 2011

    Throughout the history of regulatory agencies, they
    are always “in bed” with those whom they are supposed
    to regulate.

    Cognitive dissonance precludes most Americans
    from seeing the NWO [New World Order] handwriting
    on the wall, in the courts, in business, and especially
    the Federal Reserve.

    ALL politicians are beholding to the system for their
    existence. There is not a more loyal, more insideous
    lot dependent upon the government teat then they.

    As to the people? It is every man, woman and child
    for themselves. Fools are they who believe otherwise.

  22. What would happen if all the people who are current on their “subprime loans” (not really loans), and all the people in default of what they still believe to be loans, (but are really just debt collectors with no standing to foreclose because they have no legal proof of a creditor)—-what would happen if EVERYBODY suddenly knew of the sham, and stopped paying the “bogus bill” every month—as a protest to the pervasive fraud…and had absolute PROOF that the “pretender lender” had no standing to foreclose?
    I think that might wake them up a little…

  23. As to the AGs, Tom miller said last week, about their so called “negotiations” with the banks:

    A study concerning the impending settlement between state attorneys general and mortgage servicers was deemed flawed and inaccurate by the man leading the investigation into servicing practices.

    ~snip~

    “Our proposal, if properly implemented by the servicers, should not increase the duration of foreclosures. By making foreclosures functional, servicers will make up time they’re losing now. The current dysfunctional system prolongs foreclosures,” Miller said.

    Said like a banker’s kept boy. Show us the money Miller!

    And as to the consumer protection bureau, the fact that it is within the OCC underneath the Treasury Department answering to none other than banker bitch Geithner, it’s insolvent already, a failure to launch!

  24. By the way, start pounding these Republicans via their websites and let them know thay can’t support the banksters without incurring the wrath of the votors (AGAIN). I let Ron Johnson know how I felt last night with two scathing e-mails.

    “We elected you, and we can UN-ELECT you, too.”

  25. Cuomo VS. Clearinghouse was very significant. I’m baffled why state AG’s refuse to go after these guys.

    “Clearinghouse” will be cited early in my pleading to put the court on notice that “they do have the power”.

  26. Anonymous, I’m afraid we already know the answer to your question, from Jane Bryant Quinn at CBS Monewatch:

    What’s high on the hit list in Washington DC today? The new Consumer Financial Protection Bureau, which was created to defend you from lying and predatory lenders. The financial industry hates the bureau and wants it gone. Their lobbyists and legislators couldn’t stop it from being enacted into law. Now, they’re trying to cripple it so that it can’t do you any good.

    The first shot, in March, came from the House of Representatives, which passed a resolution to starve the CFPB of funds. The Senate fired the second shot a week ago. Forty-four Republican Senators signed a letter to President Obama, telling him that they wouldn’t confirm anyone he nominated as director of consumer protection — not even a Republican — unless the bureau was restructured to their liking. It takes just 41 votes to kill a nomination (in the Senate, minorities — not majorities — rule), so the GOP has the upper hand.

    At first blush, that might sound like a bureaucratic battle that won’t matter much to consumers one way or the other. Not so. The outcome is crucial to the CFPB’s success. The bureau was set up to operate independently, so that a hostile Congress (and banking lobbyists) couldn’t cripple its work. If the GOP undermines that independence, you can kiss pro-consumer rulemaking goodbye.

    Congress established the CFPB in 2009 precisely because the existing consumer protection offices had quit doing their job. They were scattered through seven different government agencies, which paid little attention to them. In fact, they’d been co-opted by the very institutions they were supposed to regulate. For example, they had the authority to stop (or raise the alarm about) predatory, subprime credit cards and mortgages, but did nothing — even in the face of studies proving that consumers were being deceived. One agency — the Office of the Comptroller of the Currency — even went to court to stop states from enforcing their own financial-protection laws against national banks.

    Just one more reason that WE HAVE TO TAKE THIS TO OUR REPRESENTATIVES DIRECTLY, AND IF THEY WON’T DO THE RIGHT THING ON BEHALF OF THE PEOPLE, TAKE IT TO THE STREETS!

    read more:

    http://moneywatch.bnet.com/economic-news/blog/make-money/is-the-consumer-financial-protection-bureau-dead-in-the-water/1077/

  27. Of course the consumer comes in dead last,mainly because consumers do not assert themselves enough in thier own defense.It’s like the commercials on TV about hiring some agency to stop collection actions and phone calls and so forth.I have the answer for you and it’s not hard you do one of two things,hang up or make it very clear to whoever is calling that you are not paying the bill.Repeat process’s one and two as many times as is necessary.Are they calling for someone else and not youi.e. personal reference tell them as soon as they cut you a check for a messanger fee 250.00 you’ll get that person a message till then …no not so much.Important step here they can’t cut you a check if they don’t have that info.Not only oes it become really fun to mess with them but it’s a great way to vent and get rid of some stress.Just visulize the looks on thier faces as you feed them the same tripe they feed you.Atleast you remain active in your own defense.Remember they are only bills and this is only money not the rest of your life.

  28. How will the Consumer Protection Bureau affect – or be affected by the OCC??

  29. oops Spelling Mistake

    Has anybody gone to the bank branches lately that have sprung new branches all over. In Supermarkets in strip centers all over town?

    THEY ARE ALL EMPTY OF CUSTOMERS. THEIR ARE MORE EMPLOYEES TELLERS THAN CUSTOMERS. VIRTUALLY THE BRANCHES ARE EMPTY.

    These Fascist are gonna get what all Fascist Get A short life.
    NEVER AGAIN

  30. Has anybody gone to the bank branches lately that have sprung new branches all over. In Supermarkets in strip centers all over town?

    THEY ARE ALL EMPTY OF CUSTOMERS. THEIR ARE MORE EMPLOYEES THAN TELLERS.

    These Fascist are gonna get what all Fascist Get A short life.

    NEVER AGAIN

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