Thursday, February 3, 2011

Federal Bank Regulators Fail to do their Job

Update - 4-8-2011:  Senate Permanent Subcommittee on Investigations will release a report soon about revealing emails from securities firms that bet for and against subprime mortgages and mortgage related CDOs.  The subcommittee may prosecute./pursue further, but the report is supposed to expose financial vehicles used to caused problems including the Hudson Mezzanine Funding 2006-1 that made Morgan Stanley realize $9 B loss on investment. (WSJ, 4-2/3-2011, B1)

According to an April 2010 study released by the US Senate Subcommittee on Investigations, the Office of Thrift Supervision (who regulates banks) failed to properly oversee and enforce correction of issues at Washington Mutual (WaMu) regarding their mortgage lending and risk management problems dating back to 2002.  Senator Carl Levin stated thought it was a conflict of interest.  Apparently, WaMu was a large lender in subprime mortgages during 2002 to 2008. 

Wow, can you say "bigger Government is gooder"?

Source:  MDJ, 4-16-2010, 7B

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