Fear Not--Bank Regulators Are On The Job!
In one of the most inadequate examples of journalism I have ever witnessed, a bizarre nine-sentence AP article that briefly appeared today reveals that bank regulators--particularly the Office of Thrift Supervision (OTS)--are "paying close attention" to high-risk mortgages. The article appears to be entirely based upon a speech given before the New York Bankers Association by John Reich, director of the OTS.
What makes this article so bizarre is its content, structure, and complete lack of purpose. Out of 9 sentences total:
5 sentences repeat some variation on the statement that regulators are watching the situation with risky mortgages.
1 sentence mentions that Mr. Reich's speech was distributed in Washington, which is about as useful to the reader as describing the color of Mr. Reich's necktie.
4 sentences contain useful information--but only if you know how to interpret it.
That is nine sentences total, to fully describe one of the major sources of debtors imprisonment in the United States. (I know that adds up to ten sentences, but one sentence had two clauses).
Since the Associated Press apparently does not wish to bother with details, please allow me to fill in the blanks by interpreting those 4 sentences of pseudo-useful information in the article.
Federal regulators are paying close attention to increasingly popular high-risk mortgages and the credit risks they pose for banks, the government's top thrift regulator said Thursday.
Translation: Consistent with the best-known secret in Washington (that regulators are supposed to protect consumers, but ultimately protect those whom they "regulate" instead), the "top" thrift regulator in the United States of America is primarily concerned with the trouble that risky mortgages could cause the banks that irresponsibly issue those loans in the first place. There is no mention of Mr. Reich being remotely concerned with the well-being of American citizens and families whose lives may be devastated by predatory banking practices.
Consumers increasingly have been using them to buy homes they otherwise could not afford.
Translation: If the consumer cannot afford a home, the problem is their lack of income, and lack of income is precisely the reason that it makes no sense to loan them money at any interest rate. This sentence is merely a disguised statement of the fact that banks are engaging in predatory lending to the most vulnerable consumers.
And banks and thrifts have been turning to them to maintain their loan volume and profits in a competitive market, sometimes lowering standards for extending credit.
Translation: The so-called Middle Class are already completely maxed out on credit (i.e., they are in so much debt that they can't handle any more), so banks are moving into the ghetto market to find new customers, even though it is more than obvious that these new customers have little or no means to repay a mortgage. In the short term, however, it looks good on the banks' financial statements to be handing out so many new loans. Again, this is a statement of predatory lending.
The regulators do not seek to stanch innovation by banks, but to encourage sound banking principles.
Translation: This is yet another veiled statement that regulators are more concerned with keeping banks sound, than with keeping consumers sound.
I should also mention that the article never probes the question of why the New York Bankers Association would ever want the "top" official charged with regulating them to speak before their group. One would naturally expect that if Mr. Reich were doing his job well, he would be the most hated man at every bankers association from coast to coast. Trade organizations typically invite only people who are friendly to their own interests to speak....
However, the reality of our pathological regulatory system is that regulators routinely leave their low-paying federal government jobs to take on high-paying positions in the very industries they once "regulated" (*wink*). So it is in their best interests to protect, pamper, and sleep with the industries they "regulate". In other words, federal regulators' work often consists of nothing more than proving their allegience to the industries they are supposed to "regulate", in order to obtain high-paying jobs in the private sector. For example, former Enron CEO Kenneth Lay began his career as a federal energy regulator....
Is it any wonder that the American Debtors Prison can destroy so many lives in the United States, while most Americans remain unaware that it even exists, when the journalists in our corporate-controlled news media don't even attempt to investigate the stories they report?
All the best,
Paul
What makes this article so bizarre is its content, structure, and complete lack of purpose. Out of 9 sentences total:
5 sentences repeat some variation on the statement that regulators are watching the situation with risky mortgages.
1 sentence mentions that Mr. Reich's speech was distributed in Washington, which is about as useful to the reader as describing the color of Mr. Reich's necktie.
4 sentences contain useful information--but only if you know how to interpret it.
That is nine sentences total, to fully describe one of the major sources of debtors imprisonment in the United States. (I know that adds up to ten sentences, but one sentence had two clauses).
Since the Associated Press apparently does not wish to bother with details, please allow me to fill in the blanks by interpreting those 4 sentences of pseudo-useful information in the article.
Federal regulators are paying close attention to increasingly popular high-risk mortgages and the credit risks they pose for banks, the government's top thrift regulator said Thursday.
Translation: Consistent with the best-known secret in Washington (that regulators are supposed to protect consumers, but ultimately protect those whom they "regulate" instead), the "top" thrift regulator in the United States of America is primarily concerned with the trouble that risky mortgages could cause the banks that irresponsibly issue those loans in the first place. There is no mention of Mr. Reich being remotely concerned with the well-being of American citizens and families whose lives may be devastated by predatory banking practices.
Consumers increasingly have been using them to buy homes they otherwise could not afford.
Translation: If the consumer cannot afford a home, the problem is their lack of income, and lack of income is precisely the reason that it makes no sense to loan them money at any interest rate. This sentence is merely a disguised statement of the fact that banks are engaging in predatory lending to the most vulnerable consumers.
And banks and thrifts have been turning to them to maintain their loan volume and profits in a competitive market, sometimes lowering standards for extending credit.
Translation: The so-called Middle Class are already completely maxed out on credit (i.e., they are in so much debt that they can't handle any more), so banks are moving into the ghetto market to find new customers, even though it is more than obvious that these new customers have little or no means to repay a mortgage. In the short term, however, it looks good on the banks' financial statements to be handing out so many new loans. Again, this is a statement of predatory lending.
The regulators do not seek to stanch innovation by banks, but to encourage sound banking principles.
Translation: This is yet another veiled statement that regulators are more concerned with keeping banks sound, than with keeping consumers sound.
I should also mention that the article never probes the question of why the New York Bankers Association would ever want the "top" official charged with regulating them to speak before their group. One would naturally expect that if Mr. Reich were doing his job well, he would be the most hated man at every bankers association from coast to coast. Trade organizations typically invite only people who are friendly to their own interests to speak....
However, the reality of our pathological regulatory system is that regulators routinely leave their low-paying federal government jobs to take on high-paying positions in the very industries they once "regulated" (*wink*). So it is in their best interests to protect, pamper, and sleep with the industries they "regulate". In other words, federal regulators' work often consists of nothing more than proving their allegience to the industries they are supposed to "regulate", in order to obtain high-paying jobs in the private sector. For example, former Enron CEO Kenneth Lay began his career as a federal energy regulator....
Is it any wonder that the American Debtors Prison can destroy so many lives in the United States, while most Americans remain unaware that it even exists, when the journalists in our corporate-controlled news media don't even attempt to investigate the stories they report?
All the best,
Paul
posted by Paul at 11:33 PM
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