I’ve been asking numerous people what Obama could do now, without needing the approval of Congress, to address many of the serious problems facing the country.
Bill Black responds:
1. Appoint (on a recess basis) Michael Patriarca as head of the Federal Housing Finance Agency (FHFA).
[Mike was the OCC wunderkind who was in charge of supervising the largest national banks then served as head of the OTS' West Region where he served with even greater distinction. He has worked since that time in banking and insurance as a senior manager and consultant. He is known for his competence, integrity, and courage.]
The FHFA remains under the control of the (second) acting director. Both acting directors had served as the senior leaders of FHFA’s predecessor (OFHEO) and failed dramatically as regulators. FHFA is in a superb position to provide decisive leadership on a wide range of critical issues (e.g., finding the true losses on CDOs, the true incidence of fraud, and the true incidence of foreclosure fraud and abuse).
2. Appoint Paul Volcker (on a recess basis) as Secretary of the Treasury. Accept Secretary Geithner’s resignation.
3. Appoint James Galbraith as the Comptroller of the Currency.
Here are things that could be announced tomorrow and are critical, but couldn’t be completed in a day:
1. Direct the FDIC and the FHFA to conduct a scientific sample of the incidence/extent of losses, mortgage fraud, and foreclosure fraud and criminal referrals (and failure to file criminal referrals) by the regulatory agencies and institutions.
2. Create a national “hot line” to report mortgage and foreclosure fraud.
3. Direct each financial regulatory agency to make the filing of appropriate criminal referrals (by the agency and the industry) a major priority. Create a national interagency task force composed of the regulators, the FBI, and the Department of Justice to coordinate and prioritize investigations and prosecutions. Create a “Top 100″ list of the most significant cases.
Bill Black is an Associate Professor of Economics and Law at the University of Missouri – Kansas City (UMKC). He was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and General Counsel of the Federal Home Loan Bank of San Francisco, and Senior Deputy Chief Counsel, Office of Thrift Supervision. He is also the author of The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry.