Business-news organizations covered the dispute between federal and state officials as a power struggle, a tit-for-tat fight. But something must have seemed odd even at the time. For one thing, The Wall Street Journal editorial page threw its federalist principles overboard and became a champion of federal regulation—seriously. In retrospect, the editorials are howlers.

The OCC has a large staff of economists whose only job is to perform the sort of sophisticated statistical modeling needed to discover relevant disparities between loan approvals and denials or in pricing. Any red flags are followed up with in-depth examinations of loan files. The agency also has staff members on-site at large banks to monitor lending practices.

And get this:

If the OCC hasn’t had a huge number of enforcement actions, one reason is because it has a chance to monitor behavior before it becomes a problem.

And the punch line:

It’s a shame more federal agencies haven’t taken their responsibilities as seriously as the OCC. (3)

That’s an embarrassment.

The states lost in the end. The administration’s legal argument was upheld just this year by liberal justices, led by Ruth Bader Ginsberg.

Whatever the legal arguments, does anyone who is not a WSJ editorial writer really think this fight was about who would regulate predatory practices? Wasn’t the fight really about whether the practices would be regulated in any meaningful way? Were state regulators usurping federal prerogatives? Or filling a vacuum?

My point is, these are questions business editors should have asked themselves. I don’t believe they did.

“Frightening clues” of the OCC’s dysfunction at the worst possible time “were available.”

The Journal, for instance, hinted that the OCC was a do-nothing agency in a good August 2005 story that introduced Dugan as the new comptroller, headlined “Bank Regulator Cleans House”

WASHINGTON — IN RECENT YEARS, the Office of the Comptroller of the Currency, the federal regulator of national banks, has developed a reputation as the watchdog that doesn’t bark — protecting the interests of banks over those of consumers. (4)

The story noted that the OCC had given the Riggs National Corp. favorable ratings for years;—until federal prosecutors in 2004 revealed the bank to be a money-laundering haven for corrupt foreign leaders. Riggs later pleaded guilty to a criminal count and was sold.

Good, post-crash explanatory reporting has finally confirmed that the OCC’s “reputation” was, in fact, well-earned. It was a do-nothing agency.

The best piece I’ve seen on regulators was by Greg Ip and Damian Paletta, of The Wall Street Journal, who back in March (5) made the smart and necessary point that half of subprime mortgages were issued by nonbanks, such as Countrywide Financial Corp. and Ameriquest Mortgage Co., whose perfidy was so vast it overwhelmed state regulators.

It goes on wisely:

Yet even where federal regulators have jurisdiction, they sometimes have been slow to grapple with the explosive growth in especially risky practices and quick to shield federally regulated banks from states and private litigants.

The story reveals the OCC’s fecklessness, illustrating it with the case of sixty-seven-year-old Dorothy Smith, of East St. Louis, Illinois, who lost her house after her crooked mortgage broker stated her income as $1,500 a month, three times her actual monthly government benefits, to support a $36,000 loan with a balloon payment of $30,000—when she was about to be eighty-three. The OCC wrote her: “We cannot intercede,” etc., etc.

One fault is that this and other post-crisis stories tend to pin blame on an easy target, the regulatory system itself (usually called a “hodgepodge,” or an “outdated” “patchwork,”) rather than on the errors and ommissions of individual officials, and, it must be said, on the policy choices of political parties and their intellectual supporters.

There is widespread agreement that the biggest shortcoming in the regulation of mortgages is the patchwork of state and federal oversight. Amid rapid evolution in industry practice…

USA Today offered the same formula:

To many critics, one big culprit is the loose patchwork of federal and state regulatory agencies that failed to do their jobs, abetted by a Congress that only now has called for reforms. (6)

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014).

Follow Dean on Twitter: @deanstarkman.