by Bill McBride on 2/12/2009 07:28:00 PM
Thursday, February 12, 2009
From MarketWatch: Office of Thrift Supervision chairman steps down
Office of Thrift Supervision Chairman John Reich on Thursday announced his resignation from the agency.This is too kind. Remember this photo?
Reich's resignation also changes the make up of the FDIC board, which has five members. In addition to Reich, Bair, Office of Comptroller of the Currency chairman John Dugan and two others sit on the division's board.
|This photo from 2003 shows two regulators: John Reich (2nd from right, then Vice Chairman of the FDIC and later at the OTS) and James Gilleran of the Office of Thrift Supervision (with the chainsaw) and representatives of three banker trade associations: James McLaughlin of the American Bankers Association, Harry Doherty of America's Community Bankers, and Ken Guenther of the Independent Community Bankers of America.|
The WaPo had an excellent article on the OTS last year: Banking Regulator Played Advocate Over Enforcer. The article discussed how the OTS dragged their feet when new lending guidelines were proposed by the Office of the Comptroller of the Currency in 2005 and 2006:
In 2006, at the peak of the boom, lenders made $255 billion in option ARMs ... Most option ARMs were originated by OTS-regulated banks.John Dugan at the OCC was trying hard to reign in the excessive lending (he started in 2005 too), but Reich was resisting those efforts.
Concerns about the product were first raised in late 2005 by another federal regulator, the Office of the Comptroller of the Currency. The agency pushed other regulators to issue a joint proposal that lenders should make sure borrowers could afford their full monthly payments. "Too many consumers have been attracted to products by the seductive prospect of low minimum payments that delay the day of reckoning," Comptroller of the Currency John C. Dugan said in a speech advocating the proposal.
OTS was hesitant to sign on ... [John] Reich, the new director of OTS, warned against excessive intervention. He cautioned that the government should not interfere with lending by thrifts "who have demonstrated that they have the know-how to manage these products through all kinds of economic cycles."
Back in 2005 I posted frequently on the progress of the proposed new guidance. I spoke with a number of regulators in 2005 and 2006 who were involved in the process, and a number of them expressed frustration with both the Fed and the OTS.
Posted by Bill McBride on 2/12/2009 07:28:00 PM