"Mortgage companies have stepped up their efforts to work with delinquent borrowers, but their actions aren't keeping up with the rapid rise in bad loans, a new study by state officials suggests. ... The mortgage companies expect less than 7% of the troubled borrowers to come up with the funds to make the loan current. ... The state report also found that resets aren't the key issue for many homeowners who are falling behind. More than 30% of borrowers with subprime or Alt-A ARMs .... are already at least 30 days past due even though they haven't yet seen their first reset, according to the report. ... Meanwhile, just 3% of borrowers with subprime or Alt-A ARMS who are currently delinquent fell behind on their payments in the first three months after the intererst rate on their loan first reset. That suggests that many borrowers were put into loans they could never have afforded, says [Mark] Pierce of North Carolina. The report also highlights the tensions between state and federal officials. J.P. Morgan Chase & Co. and Wells Fargo refused to provide data to the working group 'on the advice or direction' of the Office of the Comptroller of the Currency [COOC], according to the report. ... 'We think it's better if we collect the information we think is important for the national banks we supervise,' says [COOC] John C. Dugan, adding that 'it's great for the state to focus on the banks they supervise'," my emphasis, WSJ, 7 February 2008.
Here we go again. "Ruffling feathers"; Wall Streeters are so "sensitive", they're "New Age Men". I bet they cry regularly. The Treasury and the Fed are apparently trying to strong-arm state prosecutors to protect Wall Street's "malefactors of great wealth". I think ED should show brass 'cohones", call a press conference and tell Robert Steel (RS), super "former" GS guy, him again, and the NY Fed, "nuts" citing General McAuliffe's 1944 statement. Alternatively, ED may be biding his time. ED may get the "advice" vetted by a RS-approved "advisor", then reject it and explain why in excruciating detail. On television. What would RS do then? Attempt to have ED arrested for interfering with the operations of a federal agency under 18 USC 1505 for rejecting RS's "disinterested" advice? Suppose Joe Schmoe called RS to complain his savings were being depleted to protect the banks, would RS take his call? Get serious. Would RS or Timothy Geithner answer Joe Schmoe's phone call?
Dugan's concern for the banks is touching. Is he afraid the state regulators will expose the real reasons for the Fed-Treasury bank bailout are inconsistent with the stated reasons? The party of Abraham Lincoln, who said something about "government, of the people, by the people and for the people", in 1863 has morphed into a government, of, by and for, the banks. What a country.