BernieHund: The Political Watchdog

Robert Berner and Brian Grow wrote an interesting and informative article published on MSNBC. It is well worth the time it takes to read it.

Briefly, the article tells us that while Washington and Wall Street are telling us that they didn’t see the economic crisis coming, some people away from Washington did see it and tried to get something done about it.

The article begins:

More than five years ago, in April 2003, the attorneys general of two small states traveled to Washington with a stern warning for the nation’s top bank regulator. Sitting in the spacious Office of the Comptroller of the Currency, with its panoramic view of the capital, the AGs from North Carolina and Iowa said lenders were pushing increasingly risky mortgages. Their host, John D. Hawke Jr., expressed skepticism.

Roy Cooper of North Carolina and Tom Miller of Iowa headed a committee of state officials concerned about new forms of “predatory” lending. They urged Hawke to give states more latitude to limit exorbitant interest rates and fine-print fees. “People out there are struggling with oppressive loans,” Cooper recalls saying.

Apparently someone somewhere was watching out for their citizens. But, as expected no one was willing to listen. In fact, Hawke said said that he “would reinforce federal policies that hindered states from reining in lenders.”

Althought there were others who approached the OCC, they were brushed off. The federal government representatives continued to side with the bankers.

However, some states continued to try to contain the lenders.

Some states, including North Carolina and Georgia, passed laws aimed at deterring rash loans only to have federal authorities undercut them. In Iowa and other states, mortgage mills arranged to be acquired by nationally regulated banks and in the process fended off more-assertive state supervision. In Ohio the story took a different twist: State lawmakers acting at the behest of lenders squelched an attempt by the Cleveland City Council to slow the subprime frenzy.

While the deregulation of the financial institutions did not begin with the present Bush administration we learn from the article that:

The Bush Administration and many banks clung to what is known as “preemption.” It is a legal doctrine that can be invoked in court and at the rulemaking table to assert that, when federal and state authority over business conflict, the feds prevail — even if it means little or no regulation.

‘Fundamental disagreement’
“There is no question that preemption was a significant contributor to the subprime meltdown,” says Kathleen E. Keest, a former assistant attorney general in Iowa who now works for the Center for Responsible Lending, a nonprofit in Durham, N.C. “It pushed aside state laws and state law enforcement that would have sent the message that there were still standards in place, and it was a big part of the message to the industry that it could regulate itself without rules.”

And, that is just the beginning of the piece that chronicles how we got where we are. As the article continues the Supreme Court sided with the bankers that only federal regulation and oversight was needed.

Rather than go through each of the steps where we have been failed by those who were holding the citizens’ best interest, I suggest a full reading of the article. The reader will see that in fact, big business, bankers, and those we trusted to represent us were all in bed together engaged in an orgy that was only satisfying to their wants and desires.