Make us your home page
Instagram

Financial crisis final report suggests cutting regulation may haunt us

Every so often, something so traumatic happens that it defies immediate understanding. The terrorist attacks on Sept. 11, 2001, was such an event. It eventually prompted the 9/11 Commission Report, a riveting multi-hundred-page assessment of what happened.

Our more recent disaster was the near-financial collapse of Wall Street and the bursting of the housing bubble. Those events combined to drive the United States into an economic downturn so deep that we are only now starting to crawl out of the near-depression. Like 9/11, the financial crisis altered America. And like 9/11, a commission was formed to figure out what happened to bring the U.S. economy to its knees.

The final report of the Financial Crisis Inquiry Commission was unveiled last week with little fanfare. Most major media gave the report short shrift, but its sale on Amazon is brisk. (You can read it online for free at tinyurl.com/6y23c6z.)

It's a compelling read. I can't tell all in a short column. But I'll cite a few references to what happened in Florida.

First, kudos to analyst Mike Mayo at Calyon Securities (USA) Inc., who offers the most colorful and best overall quote in the entire report.

In testimony before the commission, Mayo said that all the go-for-broke Wall Street and home loan products — from securitized mortgages to mortgage loans requiring no documentation of the borrower's ability to repay — were a lot "like cheap sangria" made of "a lot of cheap ingredients repackaged to sell at a premium."

Said Mayo: "It might taste good for a while, but you get headaches later and you have no idea what's really inside."

That sangria hangover hit us full force in the form of millions of lost jobs, millions of homeowners whose mortgages are now bigger than the still-declining values of their houses, and a line of homes in foreclosure that stretches to the horizon.

In Florida, the report points out the Miami Herald's investigative work that showed between 2000 and 2007, an astonishing 10,500-plus people with criminal records entered the mortgage broker business field in Florida, including 4,065 who had previously been convicted of such crimes as fraud, bank robbery, racketeering and extortion.

Tom Cardwell, commissioner of the Florida Office of Financial Regulation, told the commission that "lax lending standards" and a "lack of accountability … created a condition in which fraud flourished." Ya think?

The report also notes how real estate appraisers, as the housing bubble started to weaken, felt pressured to fabricate high home values. Lenders, one appraiser group warned, were "blacklisting honest appraisers" and instead assigning business only to appraisers who would hit desired price targets.

"The powers-that-be cannot claim ignorance," Florida appraiser Dennis J. Black of Port Charlotte told the panel.

Now there's an indictment. The overseers blinked.

Note to Tallahassee: Don't let your new "get rid of regulatory red tape" fixation undermine this state's need to upgrade its history of lousy oversight of financial fraud.

Let's not go through this again sooner than we must.

Contact Robert Trigaux at trigaux@sptimes.com.

Financial crisis final report suggests cutting regulation may haunt us 01/31/11 [Last modified: Tuesday, February 1, 2011 7:08am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. After Irma topples tree, home sale may be gone with the wind

    Real Estate

    ST. PETERSBURG — To house hunters searching online, the home for sale in St. Petersburg's Shore Acres neighborhood couldn't have looked more appealing — fully renovated and shaded by the leafy canopy of a magnificent ficus benjamini tree.

    Hurricane Irma's winds recently blew over a large ficus tree, left, in the yard of a home at 3601Alabama Ave NE, right, in Shore Acres which is owned by Brett Schroder who is trying to sell the house.
[SCOTT KEELER   |   Times]

  2. Unemployment claims double in Florida after Hurricane Irma

    Business

    The number of Americans seeking unemployment benefits dropped by 23,000 last week to 259,000 as the economic impact of Hurricane Harvey began to fade.

    Homes destroyed by Hurricane Irma on Big Pine Key last week. Hurricane Irma continued to have an impact on the job market in Florida, where unemployment claims more than doubled from the previous week.
[The New York Times file photo]
  3. Calling it a 'dangerous precedent,' Tampa chamber opposes city tax increase

    Retail

    TAMPA — Calling the possibility a "dangerous precedent," the Greater Tampa Chamber of Commerce on Thursday took the rare step of opposing City Hall's proposal to raise Tampa's property tax rate because of its impact on business.

    The Greater Tampa Chamber of Commerce voted against supporting a city tax hike on commercial property. Pictured is Bob Rohrlack, CEO of the chamber. | [Times file photo]
  4. Did Hurricane Irma speed the end of Florida orange juice?

    Agriculture

    Hurricane Irma plundered Florida's orange belt, leaving a trail of uprooted trees, downed fruit and flooded groves worse than anything growers say they have seen in more than 20 years.

    A large number of oranges lie on the ground at the Story Grove orange grove in the wake of Hurricane Irma on Sept. 13, 2017, in Lake Wales. [Photo by Brian Blanco | Getty Images]
  5. St. Petersburg's newest hotel opens with craft beers, cocktails and Cozy Corners

    Real Estate

    ST. PETERSBURG — Last spring, Ryan Tarrant applied for a job with the new Hyatt Place nearing completion in downtown St. Petersburg. Among the questions an interviewer asked:

    What does this hotel need to succeed?

    Hybar, a bar area with outdoor seating  that will feature craft drinks and Sunday brunch starting Oct. 1, is ready to open at the new Hyatt Place hotel at  25 2nd St. N in downtown St. Petersburg. [SCOTT KEELER   |   Times]