Understanding Government

Sheila Bair

“[W]e were being ignored, and we had something to bring to the table,” Joe Nocera quotes the former head of the FDIC in the New York Times Magazine.  Bair was one of the few people at the top levels of government to push for more restrictions on investment banks and one of the very few to say that more banks should be allowed to fail.  It wasn’t just that the FDIC was a smaller agency than most, or that Bair was a Republican.  The reason Sheila Bair got no traction for her sensible views was often due, by all appearances, to the fact that she’s a woman. (more…)

The FDIC claims that Community Bank of Oak Park River Forest is not keeping up its part of the bargain as a community bank.  Steve Daniels of Crain’s Chicago Business reports that the Federal Deposit Insurance Corporation accuses the suburban Chicago bank of “substantial non-compliance” with the Community Reinvestment Act — the 1977 law that requires banks to lend and invest in low-and-moderate income communities.

Only 14 of more than 7,500 banks inspected by FDIC officials have sunk to the level of “substantial non-compliance.” Community Bank’s problems partly lie with not investing in Austin, the very poor Chicago neighborhood just east of Oak Park.

Here is one Republican investigation of Barack Obama that may have hit a dead end. The Obama administration did not inappropriately try to save erstwhile Chicago community lender ShoreBank, concludes an FDIC inspector general report. Steve Daniels of Crain’s Chicago Business summarizes the report, requested by House Republicans who were suspicious that Barack Obama called on Wall Street giants to bail out a bank in the president’s former backyard. FDIC Chairman Sheila Bair, in fact, did call Wall Street firms but the “calls were motivated by reducing the potential losses to the FDIC’s insurance fund rather than any political favoritism.”

FDIC released a report last week on the irresponsible mortgage lending that lead to ShoreBank’s demise. The company’s remaining assets were merged into Chicago-based Urban Partnership Bank.

Granted expanded surveillance and oversight powers after the September 11 attacks a decade ago, federal banking regulators have been quietly tightening the noose on California’s semi-legal medicinal cannabis industry. (more…)

Gretchen Morgenson of the New York Times brings a cohesive and pointed review of the Financial Crisis Inquiry Commission’s report issued last week (number 46 today on Amazon’s best-seller list).  Not to depress you on a Monday morning, but Morgenson says the 576-page behemoth

makes for compelling reading because so little has changed as a result of the debacle, in both banking and its regulation.

She’s alarmed that the Federal Reserve, “defiantly inert and uninterested in reining in the mortgage mania,” now has even more power to regulate banks and their often-risky practices.  (more…)