Obvious Bank Problems?

"The coroner's report left no doubt as to the cause of death: toxic loans. ... In what sounds like an episode of 'CSI: Wall Street,' dozens of government investigators--the coroners of the financial crisis--are conducting post-mortems on failed lenders across the nation. Their findings paint a striking portrait of management missteps and regulatory lapses. At bank after bank, the examiners are discovering that state and federal regulators knew lenders were engaging in hazardous business practices but failed to act until it was too late. ... Current and former banking regulators acknowledge that they should have been more vigilant. ... As another wave of bank failures looms, policy makers are considering a variety of measures that would generally strenghten banks' finances and limit their ability to lend money aggressively in risky areas like construction. Bankers contend that such steps would not only hurt their businesses but also the broader economy, because they would throttle the flow of credit just as growth is resuming. ... Of the nation's 8,100 banks, about 2,200--ranging from community lenders in the Rust Belt to midsize regional players--far exceed the risk thresholds that would ordinarily call for greater scrutiny from management and regulators, according to Foresight Analytics, a banking research firm. ... They also conceed that they were reluctant to act when troubles surfaced, for fear of unsettling the housing market and the economy. ... 'Hindsight is a wonderful thing,' said Timothy W. Long, the chief bank examiner fior the Office of the Comptroller of the Currency [OCC]. 'At the height of the economic boom, to take an aggressive supervisory approach and tell people to stop lending is hard to do.' ... Regulators have begun to act on some of the lessons learned", my emphasis, Eric Dash at the NYT, 19 November 2009, link: http://www.nytimes.com/2009/11/19/business/19risk.html.

I doubt the regulators learned any more from our current crisis than they did from 1979-1986's S&L crisis. They will not act to stifle a boom because it is politically inexpedient to do so. The OCC still did not close Citigroup, closing small banks. The OCC is a joke. Where were the CPAs? Do you remember 1986's Keating Five? Only bank stock short-sellers have an incentive to expose bad banking practices. Didn't the bank CPAs follow the AICPA's 498-page Assessing, my 30 November 2008 post: http://skepticaltexascpa.blogspot.com/2008/11/more-good-news.html.