Deseret News | New bank agency bad idea

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In our opinion: New bank agency bad idea

Spoc | 5:19 a.m. Nov. 2, 2009

The biggest problem is what it does not do. The mechanism mandating sub-prime lending under the CRA is still in place. If the intent is to remove risky practices, repeal of the CRA should be it's primary target. But it isn't. Why?

Because this is a red herring intended to convince the voters that more governmental control is the cure when governmental control is the disease.

not happy | 6:25 a.m. Nov. 2, 2009

Big Government is a mess. These hippies know nothing about business. Get them out of office as soon as possible ! Do-gooders that do bad.

Anonymous | 6:27 a.m. Nov. 2, 2009

The new agency would not have appreciatively more powers than the various regulatory agencies already have. This editorial is a distortion of reality. The new agency consolidates several agencies into one to eliminate waste and lack of coordination. After the near melt down of our system, this proposal is badly needed. As a former federal regulator, I never could understand why we had multiple agencies overseeing banks.

Comments continue below

OK...... | 6:28 a.m. Nov. 2, 2009

This editorial represents exactly what the banks want. Why would the fox in the hen house want the farmer to get his act together?

Innovation? | 6:30 a.m. Nov. 2, 2009

The banking industry needs to be prevented from innovating us into another recession. Remember when they were "innovating" a couple years ago, building a market bubble on top of the housing bubble and claiming to have eliminated risk from investment?

the loaner | 8:07 a.m. Nov. 2, 2009

the new agency would only to entitle banks to prosper with a zero failure rate serving the corprate modle with the tax payer as the frontman ensuring the finacial liability to the public

Anonymous | 8:28 a.m. Nov. 2, 2009

The Commodity Futures Modernization Act of 2000 is what started this mess. Basically what this bill did was that it allowed side bets and credit default swaps with the market. Huge banks were placing these "swapping insurance policies" by taking out insurance policies on the housing market. When the housing market crashed and piper called, there wasn't any money to pay those credit default swaps.

Coincidently, this isn't the first time this has happened. After the 1929 crash of the stock market, Congress passed regulation acts to prevent this from happening. However, in 2000 Congress passed a new act that made the bets and swaps legal again. Thank you wall street and Congress.

Here is what the 1933 act did. Provisions that prohibit a bank holding company from owning other financial companies were repealed on November 12, 1999, by the Gramm-Leach-Bliley Act.

I'm good with the new laws.

Banks & Wall Steet | 8:41 a.m. Nov. 2, 2009

I think I read the banking industry donates the second largest amount of money to Congress. No. 1? Healthcare. I don't feel for banks, they received the bailout money for putting us in the situation we are in.

How can the editorial support total deregulation when it didn't work.

lost in DC | 8:43 a.m. Nov. 2, 2009

Spoc, the CRA has been in place since 1977. It's a red herring to blame the collapse on the CRA.

The genesis of the current collapse is slick willy and the dems telling Fannie and Freddie to lower standards to make home ownership "more affordable" for those who couldn't afford housing. That reduction in quality spread to private MBS issues. Bush's hand's off approach didn't help, either.

Sheila Bair, head of the FDIC, recently said that 85% of the non-traditional mortgages were originated by un-regulated mortgage brokers. So how does additional regulation on banks, who only made 15% of the junk, help protect foolish consumers?

anon 6:27, how long did you work as a federal regulator?

Ultra Bob | 8:56 a.m. Nov. 2, 2009

Whenever an article starts out with a paragraph like this one, speaking of fostering competition and innovation, strength of the free market and the strength that comes with inherent risks, I immediately know to pull up my boots cause there’s going to be some deep dudu.

The article is of course anti-government regulation to protect consumers because it would “stunt innovation“.

Innovation like banks not cashing employee paychecks even on their own accounts.

Recently a young relative ask for a ride to a check cashing place to cash his paycheck for his two weeks work as a cement finisher.

I ask him, why don’t you just put it in your checking account.

His response was that a few months back he did that and the paycheck bounced after he had written checks for his rent and other payments.

Not only did he pay overdraft fees to the bank, his apartment management charges $50 per day for late rent payments.

He paid an extra $400 for rent.

The check place only charged $30 to cash the check in cash.

The advantage for my relative was that if the check bounced it was the check cashing place’s problem.

rsp | 10:32 a.m. Nov. 2, 2009

Why would anyone be uncomfortable with Barney Frank writing bank regs and Nancy Pelosi designing a new health insurance program? You mean they don't inspire confidence?

@lost in DC | 11:06 a.m. Nov. 2, 2009

Your statements contradict each other.

#1 Fannie and Freddie don't make home loans, they purchase home loans from private lenders.
#2 Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble. During those same explosive three years, private investment banks – not Fannie and Freddie – dominated the mortgage loans that were packaged and sold into the secondary mortgage market.
#3 What's more, only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.

Anonymous | 11:11 a.m. Nov. 2, 2009

My question is who will regulate the regulators? I mean, isn't the Federal Reserve a private bank, but they control our interest rates, inflation, everything.

Will this regulate them to?

Reason | 12:26 p.m. Nov. 2, 2009

Good editorial.

RE: Reason | 2:06 p.m. Nov. 2, 2009

Crappy editorial. Regulate them big time, they recieved trillions in bailout money.

Stalin | 3:57 p.m. Nov. 2, 2009

Get ready for, "The People's Bank"!

Oh Boy! | 4:23 p.m. Nov. 2, 2009

Yet another part of our life and our economy the GOVERMENT is anxious to take over.

We need to get Barney and the rest of the "We can run your life better than you can", Democrats OUT of there ASAP!

Untrue claims | 9:37 a.m. Nov. 3, 2009

"The recent financial crisis was caused mainly by congressional mandates that financial institutions lend to more low-income people."

This is patently and demonstrably false. Predatory lending practices, removal of depression-era regulations, and the willingness of regulators to look the other way each played a much larger role in the crisis.

To "not happy | 6:25 a.m." | 3:37 p.m. Nov. 3, 2009

not happy | 6:25 a.m.

I agree with your observation that, "Big Government is a mess. These hippies know nothing about business".

Do people realise that the guy Obama assigned to run GM for the Government has NEVER worked in the car industry a day in his life???

How do they expect HIM to be able to make effective decisions or identify decidions that are BAD for the company... when he has no idea how these companies work?

How many people think they could just walk in off the street with their GED and run GM???

It takes some time to figure out how things run. They don't often put entry level people in this position. They have to learn the ropes, the business, learn some specialized skills, etc.

How would YOU like some young_buck who's never worked at your company for ONE DAY, and Never worked in your INDUSTRY for one day... just shows up and says, "the CEO reports to ME"!

I guess if Obama is qualified to run the United States after only 150 days as a Senator... some of these supposedly important and complex jobs aren't as complex as I thought!

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