Posted by
KsReaganite on Tuesday, February 09, 2010 1:09:54 AM
I have been in and around banking long enough to know first hand that regulation is no substitute for responsibility; on the contrary it is often an excuse for irresponsibility and an explanation for poor service. Adding a sixth federal agency on top of the five already exercising jurisdiction on consumer banking activities (OCC, OTS, FRB, NCUA, and FDIC) is counter-intuitive and flies in the face of experience. Any banker who has attempted to explain a partial mortgage loan participation up or IRA prior year recharacterization to customers, for example, knows well how multiple layers of regulations written by staff bureaucrats in Washington DC can hamper good service and create a major scope for unintended errors. Adding another set of civil servants, political appointees, and lawyers is not going to help matters at all.
KsReaganite has known mega banks, community banks, and credit unions. The fact is that a vast majority of banks in America’s smaller cities and towns are strong, stable, and very responsive to customer concerns. Their frustration often is the layer upon layer of mind boggling rules imposed on them that require scarce resources to interpret, resources that can be better used in creating liquidity and jobs. Did you know that there are rules, for example, that prohibit the loan officer of a bank from uploading a loan into the bank’s computer systems? That these rules are often crafted by individuals who have never knows a real job in their lives, banking or otherwise, does not help matters. For lazy bankers, a trail of paper suggesting adopting internal policies that reflect the rules is an excuse for having to do nothing more to be worthy of their fiduciary responsibilities.
The solution, then, to the current mistrust of our commercial banking system lies in a regulatory regime that is streamlined, unified, and participatory. A single agency that regulates all commercial banking (including thrifts and credit unions) and is made up of public appointees, consumer advocates, and industry representatives should replace the OCC, OTS, and NCUA. Such a financial oversight authority will streamline all banking regulations into plain English, develop a meaningful charter of rights for consumers, and have an ombudsman empowered to investigate substantive complaints and render sanctions as needed.
The downside? Well, it is possible that several dozen unionized civil servants and lawyers will lose their current positions and little perched of power. But, even they should be happy since they will be absorbed somewhere else in the large conglomerate that the federal government is.