The Huffington Post’s Shahien Nasiripour has some interesting reporting in a story on the Obama administration’s move to settle the fraudclosure scandal with banks for up to $30 billion in fines and writedowns. He reports state attorneys general want the settlement to be even bigger.
But most interesting to me is the reporting on what the Office of the Comptroller of the Currency is up to. The OCC, along with its now former chief John Dugan, is the bank overseer that pretty much defines regulatory capture.
Wikipedia defines regulatory capture as “when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating.”
Keep that in mind as you read Nasiripour here, remembering that he’s reporting on how the OCC wants to sharply limit how much screwed-over homeowners will get from the banks it regulates (emphasis mine):
The Office of the Comptroller of the Currency, which oversees the nation’s largest banks, intends to pursue its own settlement with lenders, a track distinct from the talks conducted by its federal counterparts, the sources said. The OCC, eager to protect major banks from expensive fines, is seeking to limit the terms to $5 billion, while also ensuring that lenders retain wide latitude in how to administer relief for homeowners, the sources said.
Looks like nothing much has changed now that Dugan is gone.
Buried down in the story are these interesting details:
The OCC has already begun a process toward resolving the allegations lodged against the banks that it regulates, recently sending draft orders detailing improper and illegal practices that the firms would have to end, according to people familiar with the matter. The draft orders, which are not public, have been shared with some federal agencies, the sources said.
One source said the OCC was effectively aiding the banks in delivering the orders by handing them valuable information about its findings, thus allowing mortgage companies more time to marshal a defense.
The OCC has also shown reluctance to share its detailed findings and documents with other federal regulators, said people familiar with its actions. As the primary regulator for the nation’s largest lenders, the OCC is privy to more inside information than its counterparts, giving it substantial power in shaping the contours of any negotiation.
I would have liked the sourcing to be stronger here, but we’ll take what we can get. It sure looks like the OCC, two-plus years into the Obama administration, is up to its same old tricks.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.