His analysis suggests a need for stronger financial regulation. However, he’s a money man so his remedy is to buy euros and yen.

The Wall Street Journal investigative ambulance arrives too late to a story about Ameriquest Mortgage Co. and other lending companies giving millions in campaign contributions in a bid to relax tougher lending laws.

Data from federal and state campaign-finance records, Internal Revenue Service filings, and the National Institute on Money in State Politics show that from 2002 through 2006, Ameriquest, its executives and their spouses and business associates donated at least $20.5 million to state and federal political groups. In comparison, over the same time period, Countrywide Financial, another large subprime lender, gave about $2 million in campaign gifts, and spent an additional $6.7 million lobbying in Washington, records indicate.

The dates speak for themselves: 2002 to 2006. Check your watches: it’s 2008.

The San Francisco Chronicle was on this back in August 2005 before the scandal unfolded:

A giant Orange County mortgage company accused of duping low-income homeowners has pumped more than $7 million into California politics since 2002, including contributions to Republican Gov. Arnold Schwarzenegger, Democratic Attorney General Bill Lockyer and dozens of other state legislators, members of Congress and political committees.

The Los Angeles Times followed in December 2005:

A booming industry that makes home loans to people with fragile credit is lobbying Congress for nationwide rules that regulators and consumer advocates warn would roll back tougher state protections.

The debate comes as millions of Americans have taken out loans with higher fees and interest rates than the mortgages granted to people with solid credit. As these “sub-prime” loans have proliferated, so have complaints from borrowers who say they’ve been slammed by surprise fees and high-pressure salespeople.

More than two dozen states, led by North Carolina, have moved into a vacuum created by weak federal regulation, imposing their own laws targeting abusive practices.

Ameriquest was founded by Roland Arnall, appointed U.S. ambassador to the Netherlands in 2006, the same year his firm agreed to settle allegations of deceptive trade practices with forty-nine states.

The Journal story does show how these efforts resulted in the rolling back of state laws in Georgia and New Jersey that might have protected borrowers.

As a sidelight, the piece includes damning information on how a rating agency played enforcer for its lender/clients. At key moments, Standard & Poor’s, owned by McGraw-Hill Cos., threatened to stop rating securities written in states where lawmakers added legal protections for borrowers. The move would have shut down the subprime market altogether and branded the states as anti-business outliers.

It is becoming clear that rating agencies’ utter abandonment of basic business integrity may ultimately rival that of accounting firms’ behavior pre-Enron. We would suggest that the full measure of raters’ culpability in the mortgage crisis has yet to be plumbed.

And, yes, it is better to do the Arnall/Ameriquest story now rather than not at all. But must that be our only choice?

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