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Financial regulator has to go

In print: Tuesday, July 29, 2008

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When the governor and Cabinet meet this morning, there ought to be more to their discussion about the state's failure to aggressively regulate the mortgage industry than the usual hand-wringing. If the state's top mortgage industry regulator does not resign on the spot, they should fire him. If Don Saxon worked in private business instead of for the state, he already would be gone.

Unfortunately, Tallahassee has a high tolerance for incompetence. Despite a Miami Herald investigation that revealed Saxon's Office of Financial Regulation does very little regulating and lets thousands of felons slide into the mortgage business, Saxon appears to be safe for the moment. Chief Financial Officer Alex Sink wants him to resign but said Monday she won't move to fire him today. Translation: She may not have the vote of Gov. Charlie Crist, who has to be on the prevailing side.

What does it take for a state bureaucrat to get fired? The Herald's eight-month investigation revealed more than 4,000 felons were allowed by the Office of Financial Regulation to get into the mortgage business between 2000 to 2007 despite being convicted of such crimes as bank robbery, fraud and extortion. Yet Saxon has mounted a vigorous if illogical defense, arguing his office considers 25,000 applications a year and rejects 30 percent of them. Volume is no excuse for poor decisionmaking and no comfort to homeowners who have been ripped off by mortgage industry officials who never should have been allowed into the business.

If the Herald's findings are not enough to take action, Crist and the Cabinet should read a scathing report issued in March by the statewide grand jury about the office's regulation of check cashers. Here's a snippet: "We conclude that the agency most responsible for insuring compliance by check cashers has failed to aggressively root out fraud and money laundering from the check cashing industry.''

Sitting as the Financial Services Commission, the governor and Cabinet oversee an office that is supposed to help protect Floridians from mortgage fraud and money launderers. They should hold Saxon accountable for failing to carry out that mission. If they don't, the voters should hold them responsible.