Sheila Bair’s Turn

Keith Epstein and David Heath of The Huffington Post have an in-depth article about how Sheila Bair got two mortgages on two different properties from Bank of America while she was discussing with them whether the bank could repay its TARP money to the government.

Let me start off by saying that I strongly, strongly doubt that Bair sought out a better deal on her mortgage because she is head of the FDIC or discussed her mortgage with any of the Bank of America bigwigs that she met with. That would be stupid, and it doesn’t fit with anything I know about her. (Granted, I know very little about her.)

That said, WHAT WAS SHE THINKING? To begin with, Bair is on the record (July 2009 congressional testimony) opposing institutions that are too big to fail, saying “We need an end to too big to fail.” She might argue that her solution is enhanced resolution authority, but she also said, “A strong case can be made for creating incentives that reduce the size and complexity of financial institutions.” She has taken pains to differentiate herself publicly from Geithner, Bernanke, and other officials and regulators as a critic of big banks and of generous bailouts.

So how does she not understand that when you borrow money from Bank of America, it gets bigger?*

In addition, how could she not realize that it looks terrible to be negotiating with Bank of America over its TARP repayment while she has a mortgage with them waiting to close?

Then of course there is the Watergate principle: the cover-up is worse than the initial wrongdoing. There are a few  aspects to this cover-up.

Not surprisingly, the FDIC has a rule to cover exactly this type of situation. It reads: “No FDIC employee may participate in an examination, audit, visitation, review, or investigation, or any other particular matter involving an FDIC-insured institution, subsidiary or other person with whom the employee has an outstanding extension of credit.” Bair should have simply gotten a waiver. Hank Paulson got a waiver to deal with Goldman Sachs on September 17, 2008, because he needed to save the financial system from collapse and Goldman was a crucial part of the system; Sheila Bair couldn’t get a waiver before she took out a mortgage to buy a house and refinance her old one?

But here’s the cover-up. Instead of admitting that they screwed up, the FDIC is claiming that she never needed the waiver in the first place. The FDIC’s ethics officer says “We have discerned that she has not participated in a particular matter involving Bank of America at the time that she was negotiating a loan.” This is a distortion of language (it was a matter, just not a “particular” matter) worthy of Bill Clinton (“It depends on what the meaning of ‘is’ is.”) or George W. Bush (“The British Government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa.”). The FDIC is insisting that because Bair did not participate in an official FDIC action involving Bank of America, she wasn’t violating any rule–even though she was meeting with senior Bank of America officials to discuss their relationship with the United States government.

But listen to this: “In response to a public records request, the FDIC redacted a reference to the meeting [with Greg Curl of Bank of America] from Bair’s calendar, saying that matters involving examination, operating or condition reports on a bank are exempt by law from public disclosure.” So which one is it? If it involved “examination, operating or condition reports on a bank” doesn’t that mean it falls under the FDIC’s ethics rule?

The other issue, which Epstein and Heath go into in depth, is that Bair got a loan on her old house that apparently she was not eligible to get according to bank policy, because she rents out part of it. I don’t think this means there was a quid pro quo or Bair did anything wrong; I think the most likely explanation is that the loan officer thought “Wow, this is Sheila Bair, I’m not going to say ‘no’ to her,” so she got special treatment without asking for it. But again, instead of admitting that Bair got a good deal, the FDIC said, “Our legal counsel does not believe [the mortgage] prohibits the rental arrangement in place and which was disclosed to Bank of America.” Only when it was completely busted by the Huffington Post (which sent people into bank offices to try to get the same deal Bair got, unsuccessfully) did the general counsel switch the story to, “It may be a simple mistake by a local representative of Bank of America.”

Does Sheila Bair not know what the rules are? Does she not think they apply to her? Does she not realize that basic common sense dictates that you don’t engage in a new, large financial transaction with a bank that you are directly involved in regulating, without being extremely careful? Simon and I wrote a book trying to show people the close relationships between the megabanks and the Washington political establishment. Bair is making our job that much easier.

* When a bank makes a loan, it creates a new asset. It does not draw down another asset, unless it gives you the loan in cash. If it writes you a check or credits your bank account or credits someone else’s bank account, it is creating a matching liability–not reducing assets by an equivalent amount.

By James Kwak

37 responses to “Sheila Bair’s Turn

  1. I think if you look closely you will find that Ms. Bair, beneath that cheery and practical exterior shares some of the character traits of her colleagues such as Tim, Barney and Chris. Case in point the shenanigans early last March and the expansion of the available credit to the FDIC and the Kabuki that preceded the Geithner plan leaked later that month.

  2. Everyone at that level of government has internalized the notion that the rules for “ordinary people” do not apply to them. Like Geithner with his tax evasion, they do this sort of thing without even thinking.

    Oh, Sheila!

  3. Yes, she obviously should have gotten the waiver. But not doing business with an entity under her supervision was kind of not possible, now, was it? Who if anybody, exactly, would that rule have let her renegotiate her mortgage with? Was there anybody left in the mortgage business that wasn’t under her supervision in some way or other?

  4. Damn, I thought she was someone to trust. That is gone now no matter what twisted explanations come forth.

  5. Too bad she didn’t go to the Credit Union — there probably is one at the Treasury Department. Their deposits are insured by another entity.

  6. “When a bank makes a loan, it creates a new asset. It does not draw down another asset …”

    I guess I take your point (asset pool increases) but I think you’re being excessively cute to save a rhetorical flourish. I take it we agree there are two ways to book the deal here: +A/-A or +A/+L. Okay, net assets grow only in the second case, but the bottom line number in either case is the same. The second may be worse from a public point of view because you’ve increased leverage (e.g., from 2:1 to 3:2). The fact that asset value has increased is almost a side issue.

    And by the way, just how are we going to pay that check when it is presented next week?

  7. There are ways she could have insulated herself from the mortgage negotiation. She could have hired a lawyer to act on her behalf. I agree with Kwak, she showed incredible insensitivity. Amazing how some Washingtonians don’t get the rules.

  8. Best comment yet!

  9. Sheila, Sheila, Sheila,(exasperation), Really, you knew better. Did the big boys take you down? Was it naivet’e, or believing that you could play ball with a den of vipers? Did you lose sight along the way of why you came to Washington DC? Did you join the dark side Sheila?, I need to know. Are you a victim of stupidity? Shelia lift the curtain and see what TBTF’s are. Discover that they are dinosaurs headed toward finality; extinction. You had a chance to do the right thing and instead chose to step into the snare.

  10. It’s probably due to being very busy and a little arrogant.

    Aside from the rental issue, did she get any kind of a preferred deal on the mortgages? Lower rates etc. than anyone with her credit score and income could have gotten?

  11. There’s NO WAY someone of Sheila Bair’s intelligence and education would have thought they could get a mortgage on a property they were at the same time renting out. Someone with just a GED certificate could tell you that doesn’t ad up. I think it’s incredibly obvious she thought the rules didn’t apply to her. Disappointing…. but upon less than a minute of reflection not really surprising. I guess I should have known better than to expect her to actually be sincerely caring about Americans when all she basically is is a Bob Dole crony. In my opinion they will rot in hell, ALL of them.

    Someone like her with a federal job could get Credit Union membership quite easily. The officer at the Credit Union would be slobbering all over her and pulling a chair out for her when he saw her job title.

    Hats off to Epstein, Heath and the Huffington post. The internet starting to handle the things we used to expect from our newspapers. Arriana is doing a good job over there, hope she keeps it up. If she can do investigative journalism like that on a consistent basis that’s worthy of some awards for Huffington and their journalists.

  12. By the way, I suppose that Huffington could also very well pull the rug out from underneath us (by charging), but does the NYT think we will pay when we can click on Huffington and get top-notch journalism like this for free??? Are you kidding me?? After NYT was handing out checks to Ben “Mr Free Credit Report dot com” Stein for months??? F*#K Off!!

  13. First we had TBTF, now we have too stupid to survive. I admire what Sheila Bair has done in the past, and I have no reason to believe she has evil in her heart, but this is too obvious and too stupid to ignore. We all heard Mass. roar. She has to go. Full stop!

    Mr. President, don’t wimp out on this. It is too stupid to defend. Sheila, thanks for the memories and some of the best insights provided into the banking mess. But you must go.

  14. “Let me start off by saying that I strongly, strongly doubt that Bair sought out a better deal on her mortgage because she is head of the FDIC or discussed her mortgage with any of the Bank of America bigwigs that she met with.”

    Oh my God! Are you for real?

    Do you really think she needs to ask for a better deal, explicitly and from the top honchos at BoA?
    You think the lower level people from BoA that she was dealing with re her mortgage didn’t know who she was and what she and the top honchos were in the process of doing? You think they didn’t figure it out by themselves that they better give her a good deal and not piss her off on a personal level, or else their bosses would kill them if the TARP repayment thing didn’t work out?

  15. Treasury Department Federal Credit Union

    https://www.tdfcu.org/home/home

  16. Hank Paulson got a waiver to deal with Goldman Sachs on September 17, 2008, because he needed to save the financial system from collapse and Goldman was a crucial part of the system

    I assume that’s meant to describe the bogus pretext, not the reality, since neither of those is true.

    I agree with the commenters that the most likely explanation here is that she wasn’t being classically “corrupt” and abusive of power, but that she, like everyone else in the system, simply takes it for granted that, at least where it comes to what she considers “the little things”, the rules don’t apply to her.

    By now the average person who reaches a certain level of clout in government/corporate life takes that for granted as a perk of office. (Just as they take the corporatist revolving door for granted.)

    The corruption is institutionalized and existential, and each new cohort of cadres is indoctrinated into it.

    All this happens regardless of any subjective corrupt intent on the part of the actors. They’re all objectively corrupt.

    I’ll also add as a general proposition that if a sector is concentrated enough that it’s hard for an alleged regulator to function as a private citizen without having to deal with regulated entities, that’s proof right there the sector is too monopolistic and needs to be smashed to smithereens.

    Of course, we may see some division on this as those who think she’s “one of the good ones” try to defend her with absurd parsings along the line of the FDIC’s imbec/ilic justifications.

    Look at Krugman’s descent into buffoonery, including his despicable casuistry defending the Gruber scam, which definitely was both objectively and subjectively corrupt on Gruber’s and the admin’s part.

  17. Sad!! “Is there no balm in Gilead?”

  18. Mark C. Nolan - Ireland

    Conflicts of interest; the root of all corporate & political malfeasance.

    Whether Ms Bair actually received preferential treatment or Bank of America actually conferred preferential treatment, is irrelevant.

    It is whether a reasonable neutral person’s perception would be apprehensive of the ‘appearance’ of bias effecting the Federal bailout and Ms Bair’s contemporaneous mortgage negotiations, ultimately tarnishing and undermining any FDIC bailout decision pertaining to Bank of America.

    Failing to apply for a waiver and then cynically trying to retrospectively ‘manage ‘the conflict of interest by semantic intereptations of FDIC employee rules, only compounds the perception.

    Following the Huffington Post and the Baseline Scenario articles, perhaps in hindsight, Ms Bair should have read Warren Buffett’s rule of thumb (for when his employees are in doubt about a potential action)?
    “ …I want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper-to be read by their spouses,children,and friends-with the reporting done by an informed and critical reporter.”*

    *See section B, Berkshire Hathaway Inc., Code of Business Conduct and Ethics.

  19. I am constantly amazed at the capacity that otherwise intelligent people have for shooting themselves in both feet. This was such an obvious conflict of interest, that it looks dodgy even if it isn’t? We have 635 members of our UK Parliament,a good many of whom have had their snouts in the trough as well. Is it any wonder that there is such cyncism about lawmakers/regulators – in fact much of the ruling elites. Once upon a time there was a notion of ” public service” – what happened to that ideal?

  20. wait a minute, wait a minute, hold the phone: are you telling me ‘the rules’ DO apply to Ms Bair, et al? Wow….

  21. If Shelia Bair were named Marvin Bair nobody in America would even know her name. She has no more importance in the financial landscape than Homer Simpson. The FDIC has no meaningful supervisory authority over anybody. Rather, it is a sink hole to dispose of mismanaged banks which are too small to matter. Assuming she can afford the payments (and as we are all supporting her in grand style I have no doubt she can), the fact that Bair obtained a routine mortgage does not create a meaningful conflict of interest. When you write about nonsense like this you dilute any effectiveness you may otherwise have in discussions of importance.

  22. Several people have asked me about an article published by the Huffington Post Investigative Fund (HPIF) alleging wrong doing by FDIC Chairman Sheila Bair with respect to a mortgage she obtained from Bank of America. I have reviewed the article by Keith Epstein and David Heath of the HPIF and frankly I am appalled. This article is, in my view, a hideous piece of garbage that lacks any thread of truth. There is no story, no smoking gun, just a lot of innuendo and malicious speculation about one of the finest people I know in American public life.

    I call upon the authors and the HPIF, and Ariana Huffington, to retract this story immediately and to apologize to Chairman Bair for this outrageous hatchet job. More, I believe that the directors of the HPIF, which is a 501(c) non-profit corporation, need to immediately initiate an investigation into this article and the authors to discover just how such a weak and clearly malicious story could be published. This article suggests to me that there is a complete breakdown in the internal systems and controls at HPIF. Were it not for the fact that Chairman Bair was a public official, in my view the HPIF would surely be facing a liable litigation for this malicious and unwarranted attack.

    I am including the statement by Andrew Gray of the FDIC below. If you have any questions about the HPIF article, please contact Andrew at AnGray@FDIC.gov

    Yours truly,

    Christopher Whalen
    http://www.rcwhalen.com
    +++++++++++++++++++++++++++
    FDIC Statement:

    FDIC spokesman Andrew Gray said, “The facts speak for themselves. Chairman Bair received no preferential treatment in her dealings in obtaining these mortgages that were fully documented with large down payments. The terms and rates were available to all eligible borrowers at the time, and were at market rates and were comparable to those offered to her family from other institutions. In addition, it has been determined by the FDIC’s Legal and Ethics Office that the Chairman did not engage in any action that would create a conflict of interest or appearance of a conflict of interest.”

    “There is absolutely no evidence of any wrongdoing here. Indeed, all of the facts are on the Chairman’s side. The Huffington Post Investigative Fund should be embarrassed to publish an article that ties together points in time without any regard to merit or context. The Huffington Post Investigative Fund purports to operate under high standards of journalistic integrity, but this “gotcha” piece is specifically designed to mislead and misconstrue the facts. I would urge them to disclose the motivations and discussions that led to this ridiculous article.”

    The article states:

    Huffington Post Investigative Fund: “Sheila Bair, one of the chief regulators overseeing Bank of America’s federal rescue, took out two mortgages worth more than $1 million from the banking giant last summer during ongoing negotiations about the bank’s bailout and its repayment.”

    • This timeline is flat out wrong. Bank of America received government assistance in late 2008 and early 2009, long before Chairman Bair’s family began discussions with lenders about financing the purchase of a home in Washington. Discussions on TARP repayment did not begin until November of 2009, long after these mortgages were settled.

    Huffington Post Investigative Fund: “In the weeks between the closing on her two mortgage loans, Bair met with Bank of America’s chief negotiator in the bailout talks.”

    • Her family mortgage terms were locked in for both loans by June 23rd, 2009. Both mortgages were settled by August 11th under the same terms previously locked in. The Greg Curl meeting was a courtesy meeting that he requested. There was no discussion of TARP repayment. The FDIC was not informed of BofA’s interest in repaying TARP until November 2009, long after the mortgages had been negotiated and settled.

    Huffington Post Investigative Fund: “Bair did not seek or receive an exemption until last week, when her agency gave her a retroactive waiver from the rules after an inquiry…”

    • It has been determined by the FDIC’s Legal and Ethics Office that the Chairman did not engage in any action that would create a conflict of interest or appearance of a conflict of interest. The FDIC’s Chief Ethics Officer determined that she was not involved in any activity that required a waiver. He also determined that during the timeframe of May 1st 2009 through the present, there was no conflict of interest or even appearance of a conflict of interest.

    Huffington Post Investigative Fund: “raise questions about whether she and her husband should have qualified for the terms that they received.”

    Huffington Post Investigative Fund: “At the request of the Investigative Fund, a mortgage broker asked two loan officers working at Bank of America if a borrower could qualify for a second-home loan with a renter, using similar details as Bair’s loan involving a separate living quarters for the renters.”

    • The Chairman’s husband sought quotes from two lenders for these loans. Chairman Bair’s husband took the lead in discussions on both mortgages. The Amherst home was refinanced from a 15-year to a 30-year fixed to lower the payment. After attempts to sell the house failed, Chairman Bair’s family found themselves in the position, like tens of thousands of families across the country, of having to carry two mortgages.

    For the Amherst property, a community bank stated that they were willing to view it as “a second home subject to the appraiser confirming that the property has an apartment that was currently being used as a second property.” Both lenders were aware that a portion of the property had been rented, and would continue to be under lease, but the remainder would be available exclusively to the Bair family. Although the interest rate was significantly lower on the community bank offer, the family decided to accept the BofA offer because it provided a 30-year fixed product. Chairman Bair’s family has repeatedly used the apartment for vacation and family visits.

    The lenders obviously made their judgments taking into account LTV, credit history and other personal financial information that the Huffington Post Investigative Fund would have been unable to duplicate.

    Huffington Post Investigative Fund: “The FDIC’s ethics office, said he had done a review and – without Bair asking – granted her a waiver from the rule retroactive to March 1, 2009.”

    • She received a determination from the FDIC’s Chief Ethics Officer that during the timeframe of May 1st 2009, through the present, there was no conflict of interest or even appearance of a conflict of interest. She was not required to notify the Ethics Office of these mortgages until the financial reporting period beginning this month.

    Huffington Post Investigative Fund: “The rules state that “No FDIC employee may participate in an examination, audit, visitation, review, or investigation, or any other particular matter involving an FDIC-insured institution….”

    • The FDIC’s Chief Ethics Officer made a determination that she was not involved in any activity that required a waiver. He also determined that during the timeframe of May 1st 2009 through the present, there was no conflict of interest or even appearance of a conflict of interest.

    Huffington Post Investigative Fund: “Bank of America, among the world’s largest financial institutions, received $45 billion in federal bailout money.”

    • This was a Treasury TARP decision, supported by BofA’s primary regulators, the Federal Reserve and the Office of the Comptroller of the Currency. That being said, these were all decisions made well before May 1st 2009, when Chairman Bair’s husband first reached out to lenders, including BofA, on financing a home purchase in Washington.

    Huffington Post Investigative Fund: “the FDIC board voted in January 2009 to guarantee more than $100 billion in risky assets held by the bank.”

    • The ring face transaction referenced here required the FDIC to backstop $2.5 billion in losses, not $100 billion. This is a factual error. In Chairman Bair’s testimony, she indicated that she was reluctant to participate and questioned whether the ring fence was necessary. This backstop was part of a joint Treasury/Fed/FDIC program to stabilize financial markets. Again, this decision finalized in January 2009 was made well before Chairman Bair’s family began discussions with lenders about obtaining a mortgage.

    Huffington Post Investigative Fund: “Bair’s deputy signed the agreement on Sept. 21st, 2009, records show.”

    • The decision to release BofA from the ring fence occurred on September 21st, through an inter-agency process, with negotiations led primarily by Treasury. The Legal and Ethics Offices have determined that this was not a particular matter for the Board. As the article indicates, it was signed by the FDIC’s CFO, a long term career government servant.”

    Huffington Post Investigative Fund: “By the summer, Bank of America also began pushing for the right to pay back the TARP money…”

    • The FDIC was not notified about BofA’s interest in TARP repayment until November 11th 2009. This timeline that is used is flat out wrong. In addition, this whole point is irrelevant because the obligations of the mortgagors (Chairman Bair and her husband) and the mortgagee (BofA) became fixed by June 23rd at the time of the lock-in.

  23. Silly stuff here, James. No one is doubting that BofA offers some good products. This is the old, “no one in the DoJ better be using MS if their investigating them for monopolistic practices” – this is a crap argument.

  24. Jake – Agreed. I don’t understand why James and other keep blowing Sheila Blair. And of course, you’re right: it’s because she’s a woman. I suppose it helps James and the others feel (and show) that they’re not misogynists, but it just ends up making them look silly and condescending to women – puffing up the importance of a femal that just isn’t warranted.

  25. I think this a pseudo-scandal.
    If the Bairs got a great big illicit benefit from this, where and what is it? A re-financing of a house that they intending, or maybe not intending, to rent out?

  26. So you equate $100-worth MS Word with $1 million-worth mortgages? Haha. You’re funny.

  27. Interesting read, the FDIC’s excuse. But it doesn’t disprove anything, nor does it make the HPIF article “a hideous piece of garbage”.

    The FDIC’s argument is basically that since the alleged favours weren’t exchanged concurrently and since there were other parties involved (Treasury/Fed/FDIC CFO; Mr. Bair/community bank) then there were no favours exchanged between Mrs. Bair and BofA.
    That is BS. If you’re waiting for a smoking gun of that calibre, you’ll be waiting forever. Few trails are as obvious as the Blagojevich one.

    I think you have to ask yourself what the purpose of the HPIF article is. Is it to shine a light on corruption in Washington (and elsewhere in government)? Or is it to prove that corruption in a court of law?
    If it’s the latter, then the article obviously fails. But if it’s the former, it’s a damn nice article. At least I think it is.

  28. not only that … for the average consumer, credit unions offer better rates than banks do. not sure why. so what was the motivation for her to go to a bank?

  29. Okay, seriously? From whom is the head of the FDIC allowed to get a mortgage?

    You really think and ordinary course mortgage loan would influence her? You honestly think she wasn’t treated like every other borrow, or that she couldn’t have borrowed from many other lenders? This is a total non-issue.

  30. “It is whether a reasonable neutral person’s perception would be apprehensive of the ‘appearance’ of bias effecting the Federal bailout”

    Sounds like a reasonable test. The answer is a clear no. Next question.

  31. “You think the lower level people from BoA that she was dealing with re her mortgage didn’t know who she was and what she and the top honchos were in the process of doing?”

    Yes. There is no frickin way the loan officers involved knew anything non-public about what was being negotiated.

  32. You know what really bothers me? The lack of mainstream media reporting any negative stories about Ms. Bair. If this investigation was on Mr. Geithner, there would be thousands of articles out there with millions of comments demanding justice.

    Who is backing her in secret? How can anyone not see what a mess she’s made? I am just an average citizen so maybe these economics experts can explain to me why they think she is so amazing.

    A lot of peoeple praised her for fighting against power grabbing. What? She is the most power grabbing official in our entire government!

    Her most important job is deposit protection. The FDIC is insolvent! Its DIF ratio has fallen below the Congressional mandatory minimum since June 2008. It got mad at Bloomberg for trying to warn about the inadequacy of the insurance reserve in September 2008.

    Reports from the Office of Inspector General showed the FDIC was a poor federal regulator (class NM banks are under its sueprvision) like OCC, OTS, and the Fed so it was just as responsible for the excessive loss of its fund.

    Ms. Bair wasted billions in her loan modification program at IndyMac, when the unemployment rate was still low so the mortgages in trouble belonged mostly to people who couldn’t afford their homes in the first place. Even worse, that happened at the expense of uninsured depositors!

    Ms. Bair seized Wamu based on liquidity pressure but then turned around and used TLGP to help GS, JPM, etc raised billions to help them improve liquidity instead of seizing them too.

    She wiped out Wamu bondholders, which essentially destroyed the bond market and expedited the demise of Wachovia, but then turned around to protect bondholders via TLGP!

    Even Mr. Denninger spoke of her failure in following Prompt Corrective Action, necessitating loss sharing agreements worth billions of dollars for zombie bank deals.

    Google Bank of Idaho, FBOP, BankUnited, etc and you will see there was no rule or consistency in FDIC’s bank seizures, bidding, and sales.

    Puget Sound Journal recently reported that Wamu was solvent and liquid, and when it requested information from OTS and the FDIC the documents were blacked out. The Senate was also investigating the Wamu seizure.

    “The Fight For Wamu Documents”
    http://www.bizjournals.com/seattle/blog/2009/12/the_fight_for_wamu_documents.html
    “FDIC’s WaMu role under investigation by Senate subcommittee”
    http://seattle.bizjournals.com/seattle/stories/2010/01/18/daily31.html

    Ms. Bair made so many poor decisions at the worst financial crisis of our generation yet most media outlets and economic experts still speak so highly of her.

    I just don’t understand!

    Anyways, I-Fund issued a response to FDIC; it stood by its investigative report.

    “Investigative Fund response: We stand by the story. Many of the points mentioned by the FDIC in this statement were included in the original article. We’ve responded below to points where new information was provided by the FDIC after publication.”
    http://huffpostfund.org/stories/2010/01/fdic-responds-i-fund-story-sheila-bairs-mortgages

    *imho*

  33. By the way I want to add that i am happy there are sites like HPIF. We are able to learn a lot about the injustices that are not normally covered by MSM, especially if these stories can be backed by solid evidence through hard research.

    All the regulators need to go and be replaced by new ones that will protect average consumers and small businesses by focusing on their duties and conducting proper supervision.

    I am really tired of government officials who say one thing but then do the other.

    I think regulatory failure/random intervention was key to this economic meltdown and the subsequent rescue.

    Why were GS/MS allowed to become bank holding companies?

    Why didnt TLGP have any restriction on the use of the capital raised via the program?

    Like I said before, I am not an expert in economics so please feel free to correct me if I wrote anything stupid.

    *imho*

  34. Good information here. I enjoyed reading this and can’t wait for more. Keep up the good work.

  35. The fact the FDIC insures (and regulates) Bank of America is publicly disclosed on the door of every branch. The fact Sheila Blair is the current chairman of the FDIC is also publicly known (and no doubt was noted on the loan document under “occupation”).

    What other non-public information would the loan officer need to know? Like the song says, you don’t need to be a weatherman to know which way the wind blows.

  36. I’ll also add as a general proposition that if a sector is concentrated enough that it’s hard for an alleged regulator to function as a private citizen without having to deal with regulated entities, that’s proof right there the sector is too monopolistic and needs to be smashed to smithereens.

    Well, in the court system judges recuse themselves when they have conflict of interest— in the famous Alcoa antitrust case back in the day, so many Supreme Court Justices were conflicted out as Alcoa shareholders that a panel of circuit court judges had to designated to hear the case. If every judge would be unavoidably conflicted (say, a case involving taxpayer or voting rights… judges do pay taxes and vote after all) then no recusal is necessary.

    Blair didn’t have an unavoidable conflict, as Del noted above– she could simply gone to a credit union for a mortgage.

  37. So we are back to “the head of the FDIC cannot get a mortgage.” Brilliant.