Monday, March 10, 2008
A PCAOB Opportunity
"Fannie Mae and Freddie Mac announced an agreement with New York Attorney General Andrew Cuomo to discourage inflated appraisals by enforcing new standards in the home-mortgage market. ... The code bars lenders and their representatives from pressuring appraisers to supply inflated estimates of property values, which are widely viewed as an important contributor to the mortgage crisis. Appraisers have long complained that they risked losing business if they didn't appraise homes at values that would allow loans to be made. ... Fannie and Freddie also agreed to create an independent organization to monitor the new appraisal standards. Their main regulator, the Office of Federal Housing Enterprise Oversight [OFHEO], approved the new code", WSJ, 4 March 2008.
We are witnessing the "SEC-ization" of the mortgage business with OFHEO as the SEC, Fannie and Freddie as underwriters and appraisers as CPA firms. We need one more organization to made the ensemble complete, the "independent" monitoring organization. I nominate the PCAOB. Why not? It already exists and has shown tremendous competence in regulating the CPA profession. Hey Mark Olson (MO), how about it? This looks like a natural PCAOB "product extension". Hey, MO, get on with it.
Seriously, this appears to be a "pass the buck" operation to blame the mortgage mess on the least well politically connected group responsible for it, appraisers.