Self-Dealing Revenge from OCC & Treasury Targets the CRA

Greenville   Sometimes you wonder why former Goldman Sachs and banking executives flock to political jobs like running the Treasury Department or the Office of the Comptroller of the Currency, but then you realize the facts.  It’s about score-settling or figuring out how they and their buddies can make more money in banking now and in the future.  The backstory on the current push to rewrite the rules on the more than forty years of the Community Reinvestment Act or CRA that mandated fair banking and the end of redlining to force banks to invest in lower income and minority neighborhoods is full of just such conflicts of interest and self-dealing.

As the Treasury Department and the OCC propose to rewrite and dilute CRA rules the Wall Street Journal reports that the issue is messier. Steven Mnuchin was bottom fishing after he left Goldman Sachs as an investment banker and flirted with financing in Hollywood.  He had assembled a group to pay $1.5 billing to buy IndyMac from the FDIC after the highflying, lowballing mortgage chop shop suffered a run forcing the FDIC as the deposit insurer to take over.  Mnuchin hoped to paint lipstick on the pig, resell it or take it public for a killing with his buddies.  One of his buddies was Joseph Otting who he recruited to run OneWest, the name of the newly whitewashed bank.  This was all capitalism at the roulette wheel.  Mnuchin and Otting got an offer to sell to CIT Group for $3.4 billion that would allow the investors to turn a profit of over $3 billion in 2014 after only six years.

Cha-ching, here come the filthy rich, isn’t greed great.  Yes, until they realized there were rules and regulations in the new west of OneWest.  They still had a portfolio of the stinking mortgages that had given them the bank in a fire sale in the first place, meaning that they had CRA obligations.  Any time a sale of this kind happens over the 40-year period CRA as ACORN and any organization – or bank – worth its salt knows, that opens the window for Federal Reserve and other reviews of the banks lending practices.  More than just some bad mortgages were stinking up their California lending experience in their get-rich-quick scheme and several organizations including the California Reinvestment Coalition and the Greenlining group filed challenges to their lending record.  None of this is new.  Groups including ACORN and scores of others have followed the rules and negotiated agreements for bank lending that has now surpassed a trillion dollars in low income neighborhoods.

The new west robber baron wannabes, Mnuchin and Otting were offended that they were challenged.  They tried to buy the groups off, but the groups had clear demands.  Mnuchin and Otting were offended at the impunity of community groups thinking that they had the right to negotiate for loan equity in the community.  Eventually they pledged $5 billion in loans to the community, which was less than the demands, but miles more than they intended.

CRA has benefited millions of people who were able to buy homes.  Mnuchin and Otting had their feelings hurt and their entitlements challenged.  Now Mnuchin is Secretary of the Treasury and Otting is Comptroller of the Currency.  They vowed to get even, and their revenge will be diluting CRA and preventing millions from owning homes in the future because of the act’s guarantee of fair banking and procedures that assured it.

As President Trump would say, “sad!”

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The Wall Street Journal Thinks Hillary is Too Close to Wall Street!

Wall-Street--Lower-Manhattan-53049New Orleans   Did the sun just rise in the west? Is down up and up now down? Did hell just freeze over? What’s up with the world?

Why do I wonder?

Simply put when the rightwing editorial page of the Rupert Murdock owned Wall Street Journal makes the case that Hillary Clinton is too close to Wall Street something is definitely topsy-turvy in the world as we know it. This is a classic case of the exception proving the rule. Normally, the editorial page of the Journal is the national equivalent of the society page in your local daily paper: a must miss feature! They run a hater nation page there with a heavy-handed Republican bias, and if their editorials are just snide and snippy, instead of hurtful and malicious, it counts as a good day.

All this is very worrisome, because if the Wall Street Journal thinks that Hillary Clinton is too close to Wall Street, where they butter their bread, then what are the rest of us to think? One can try to pry facts off of someone’s shoes, but it’s hard to get something that seems like gospel out of your head.

The Journal used the recent New Hampshire debate before the upcoming primary as the platform for their question about the $675,000 Mrs. Clinton had received from the financial giant Goldman Sachs.

“Host (CNN) Anderson Cooper asked her whether she really had to be paid $675,000 for giving three speeches. ‘Well, I don’t know. That’s what they offered,’ said Mrs. Clinton – to much audience laughter. She then tried the argument that every Secretary of State does it, and then settled on the unbelievable claim that at the time she took the money she didn’t know she would be running for President again. Mr. Cooper was so startled he asked her to repeat the point.”

Ouch! The Journal then piles on by following that very expensive blow with some cheaper shots, claiming that Clinton’s deal reflected the working détente between Democrats and Wall Street where the big Demo-dogs take their money, then mega-mouth attacks on them in public, while letting them get away with, well, everything let’s hope, but murder, in private. The Journal wants to believe that has to do with Wall Street trying to muscle out competition from elsewhere, but the rest of us worry, especially in light of the riches and ruin of recent years, that it is really about having them march in the constant favor parade whose big and small floats pave the way to even more of their riches at the expense of the rest of us.

The kicker comes at the end as they wrote,

“When asked on CNN if she regretted her income windfall from Goldman, Mrs. Clinton replied, ‘No, I don’t, because, you know, I don’t feel that I paid any price for it and I am very clear about what I will do and they’re on notice.’ Mrs. Clinton is the one on notice that there is a political price to be paid for it…And because everyone knows why Goldman paid her $675,000.”

This isn’t a shouting match about emails that amount to making a mountain out of a molehill, but something a lot more serious, and these answers really aren’t enough to make any of us comfortable, even the Wall Street Journal.

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