Warren op-ed: Banking on Hypocrisy

Check out Credit Slips co-blogger Elizabeth Warren's op-ed on Politico, entitled Banking on Hypocrisy. She quotes extensively from a letter that the American Bankers Association sent to banking regulators in 2006 in opposition to the proposed intra-agency guidance that would have required better underwriting of nontraditional and subprime loans. While it's entertaining--and painful--to read just how wrong the ABA was in its assessment of mortgage risk, Professor Warren's point is to compare the ABA's position on consumer protection regulation in 2006 with its current stance. In the memo, the ABA decried the "marriage of inconvenience between supervision and consumer protection," saying that it blurred "long-established jurisdictional lines." The ABA recommended that the safety and soundness provisions be separated from consumer protection provisions. Yet, now the ABA has opposed a stand-alone Consumer Financial Protection Agency, saying that safety and soundness and consumer protection need to be performed by the same agency. The ABA reminds me of Mayor Quimby from the Simpsons: "Very well, if that is the way the winds are blowing, let no one say I don't also blow."  (Thanks to Bob Lawless for offering up this quote the other day in another context; it's so apt these days!)

Comments

[Mike Dillon]

For those not familiar with Mayor Quimby:

http://www.soundboard.com/sb/Mayor_Quimby_sounds.aspx Track 2

(sigh)... If only I had had professors capable of quoting the likes of The Simpsons.