Federal regulators failed to detect any problems in the financial system in the days, weeks, months, and years leading up to the cataclysmic collapse that began in 2008.
Where were the Securities and Exchange Commission (3,814 employees); the FDIC (7,421); the Comptroller of the Currency (3,216); the Office of Thrift Supervision (251); the Federal Reserve Board and its 12 regional banks (2,100 employees in Washington, D.C., alone); the Federal Housing Administration (3,204); the Federal Financial Institutions Examination Council (10); and the Federal Housing Finance Agency (466)? In particular, where was the Federal Housing Finance Agency, which was supposed to oversee Fannie Mae and Freddie Mac? Supplementing this massive federal presence were several dozen state bank supervisory authorities responsible for the safety and soundness of state-chartered banks, which also operate with FDIC insurance.
Looking back over the rubble of America’s housing finance system, one can see that these federal entities did not lack experience. The FDIC has been attempting to perform these oversight tasks for eight decades, the Federal Reserve System has been doing so for 100 years, and the Comptroller of the Currency has been working at them since 1863. Perhaps practice makes perfect only in music and sports, not in government.
Friday, October 22, 2010
A Good Explanation For Why We Don't Need More Regulation and More Regulators In This Country
For those who think that the current economic downturn was caused because we didn't have enough regulation or enough regulators, I present the following: