financial crisis

Without a doubt the current U.S. financial crisis is caused by the sub-prime mortgage game that many financial institutions went crazy with. Yes, the financial institutions got into a game that threatened the economy. Now, we are talking about forming a bureaucracy to handle and own all these bad mortgages.

The ones that are really to blame for this mess are the bureaucrats that were supposed to be providing oversight of the industry. That is the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), financial institution outside auditors and staff auditors. These people and agencies are charged with insuring that financial institutions adhere to "safe and sound" business practices.

After the debacle of the late 1980's and early 1990's with the savings and loans one would think they learned a few lessons. The Resolution Trust Corporation (RTC) was formed to handle the assets of the failed S&L's. It was a giant black whole with more waste than any one human can imagine. The cost of that bailout would have been a lot less if someone had control of the bureaucrats. At no time did that agency have a handle on what was going on inside their own agency. And Congress didn't want to know!

You ask how I know this? At that time, I was working for a FDIC owned S&L that was formed from three failed S&L's. The FDIC actually owned the S&L and hired a company to manage it. While I was there RTC came in and closed the government owned S&L. Their response was that they didn't know it was a FDIC S&L.

This is what we are going to have to look forward to with this new agency that President Bush proposed this morning. And once again Congress isn't going to want to hear about the waste. Which ever presidential candidate wins the election will distance himself from this "solution" and condemn the other party for enacting it.

And the fun continues...