Commercial PropertyRealty Viewpoint: Federal Charter Banks Can"t Have It Both Ways, Mr. Paulson
As foreclosures escalate, U.S. Treasury Secretary Henry Paulson is heading a presidential working group that he says wants more regulation on banks, including federal and state oversight on mortgage lenders.
What a difference a recession makes. Back in 2004, it was the Office of the Comptroller of the Currency, a division of the Treasury that oversees banks, that issued new rules that national banks should be exempt from state oversight. Since 1863, state law has applied to national interstate banking in four areas: branching, consumer protection, fair lending and community reinvestment. But banks complained that doing business across state lines meant complying with too many regulations raising costs. Now state-chartered banks are at a competitive disadvantage.
Over numerous objections, including the National Association of Realtors, the NAACP, and others, state consumer protections went by the wayside as banks like JP Morgan and many more applied for federal charteras fast as their little greedy legs could carry them. Between 2003 and 2005, the share of banking assets held by national banks shot up to 64 percent from a 20-year average of 55 percent.The share of deposits held by out-of-state national banks increased from 28 percent to 38 percent between 2004 and 2005 in states with predatory lending laws, while their market share in states without such laws remained fairly stable at around 29%, noted the Chicago Fed, in a 2006 study.
By 2007 mortgage fraud, appraisal pressures, and securities manipulations created huge profits for banks through mortgage lending, but resulted in "the highest number of delinquencies and foreclosures, rapid and near complete shutdown of the non-conforming secondary market, and hundreds of announced closures of mortgage originators," reports the Mortgage Bankers Association.
It"s a little late for regulations, isn"t it, Mr. Paulson?
I warned you earlier in my many articles relating to the Conspiracy to Put Realtors Out Of Business, that the end game of federal protection of banks was about getting in on the HUD1.
And here"s how it"s going to play out. The dual banking system, one of our nation"s many checks and balances, is teetering.
The presidential working group has recommended that "state financial regulators implement strong nationwide licensing standards for mortgage brokers," according to the group"s report, released Thursday.
What that does is make it more expensive for state-regulated mortgage lenders to compete with national mortgage lenders who don"t have to comply with state regulations.
How long do you think they"ll be able to keep up?
As the federal banks gain in market share, the feds will have to implement even more oversight and that costs taxpayers money.
One way to pay for the oversight is to implement a federal transfer tax on every piece of property that"s sold.
If that happens, homebuying will get even more expensive because the money won"t be used to regulate banks. It will merely pay for more programs that appear to regulate banks.
This is a land grab, folks. Not a solution.