Dodd, Duplicity and Federal Oversight

Since we have had several articles on the financial crisis on the Evangelical Portal at Patheos (see here and here), I just wanted to issue a quick note that Senators Dodd and Conrad, both of whom were tasked with oversight of banking and mortgages, are exposed now to have had deep conflicts of interest.  Angelo Mozilo rose from the butcher shop in which he was raised to being the head of Countrywide, which pushed harder than any other mortgage lender into the subprime market, inflating the bubble that later burst on all of us.  Mozilo himself made hundreds of millions of dollars before Countrywide and IndyMac collapsed and destroyed many billions of dollars in American wealth.

Mozilo gave sweetheart deals to powerful people, including Congressmen and Senators (“friends of Angelo”), on their own mortgages–two mortgages apiece from Countrywide.  Dodd heads the Banking Committee and Conrad the Budget Committee.  These are precisely the same people who were supposed to supervising and regulating the housing and financial markets–precisely the ones who were supposed to be keeping an eye on people like Angelo Mozilo–and they, knowingly, received mortgages from Mozilo that were well beneath the market rate.

That these are Democratic Senators is not the point.  Every Congressperson and Senator who profited personally from turning a blind eye toward the financial and housing markets should be run out of town.

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~ by tddalrymple on July 28, 2009.

2 Responses to “Dodd, Duplicity and Federal Oversight”

  1. Allow me to acquaint you with a little reality. You are missing the big picture. You can read the details in the book “Catastrophe”. However it all starts when the Clinton Administration calls for Fannie Mae and Freddie Mac to encourage more mortgage loans to low and middle income families. In 1996, Secretary of Housing and Urban Development (HUD) Henry Cisneros sets a quota requiring that 42 percent of Freddie or Fannie loan purchases or insurance be for families in the low income or middle income bracket. In 2000, his successor Andrew Cuomo, raises it to 50 percent.
    It is politicians that are hungry for votes to retain their positions of power that prey upon the depravity of the culture to achieve their personal goals. Most businesses merely play the cards dealt them. I know this pretty much first hand. Angelo is a diversion. He really did work hard to get the company to the level it was. However, he fell for the govt “gift” of new regulations and spent too much time away from the troops by turning control over to managers that never really learned the business like he did.

    • I absolutely agree (as you might have seen from earlier posts) that the increasing pressure on Fan and Fred to press further and further into the subprime market, as well as pressure on banks to move in the same direction or face the accusation of “redlining,” is a large part of the issue. Somewhere along the line we began to believe that home ownership is some sort of right for all Americans, and some apparently assumed that private banks, backed by Fan and Fred, had limitless amounts of resources to swallow up any losses from their subprime gambles.

      So I don’t see any disagreement with you on that score. I think I’m less likely to let businesses off the hook, however, by saying that “merely play the cards dealt them.” Businesses must still be susceptible to moral evaluation. Angelo is a small part of the problem, but unfortunately he’s become emblematic of the sort of executive who made hundreds of millions pushing a product that eventually exploded and left the American people holding the bill with trillions of dollars in losses. This is one of those cases where there really is abundant blame to go around.

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