What Obama Could Do Now, Without Congress, to Fix the Mortgage Meltdown

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William Black

William K. Black was a federal regulator during the Savings and Loan crisis and appears in Michael Moore's 'Capitalism: A Love Story'

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October 13th, 2010 11:48 AM

What Obama Could Do Now, Without Congress, to Fix the Mortgage Meltdown

By William Black

1. Appoint (on a recess basis) Michael Patriarca as head of the Federal Housing Finance Agency (FHFA).

[Mike was the OCC wunderkind who was in charge of supervising the largest national banks then served as head of the OTS' West Region where he served with even greater distinction. He has worked since that time in banking and insurance as a senior manager and consultant. He is known for his competence, integrity, and courage.]

The FHFA remains under the control of the (second) acting director. Both acting directors had served as the senior leaders of FHFA’s predecessor (OFHEO) and failed dramatically as regulators. FHFA is in a superb position to provide decisive leadership on a wide range of critical issues (e.g., finding the true losses on CDOs, the true incidence of fraud, and the true incidence of foreclosure fraud and abuse).

2. Appoint Paul Volcker (on a recess basis) as Secretary of the Treasury. Accept Secretary Geithner’s resignation.

3. Appoint James Galbraith as the Comptroller of the Currency.

Here are things that could be announced tomorrow and are critical, but couldn’t be completed in a day:

1. Direct the FDIC and the FHFA to conduct a scientific sample of the incidence/extent of losses, mortgage fraud, and foreclosure fraud and criminal referrals (and failure to file criminal referrals) by the regulatory agencies and institutions.

2. Create a national “hot line” to report mortgage and foreclosure fraud.

3. Direct each financial regulatory agency to make the filing of appropriate criminal referrals (by the agency and the industry) a major priority. Create a national interagency task force composed of the regulators, the FBI, and the Department of Justice to coordinate and prioritize investigations and prosecutions. Create a “Top 100? list of the most significant cases.