Lax Agency (OTS) that Caused USA's Financial Meltdown Finally Hits the Dust State, National, International, posted by JL, a resident of the Del Prado neighborhood, on Dec 14, 2011 at 11:16 am
The Office of Thrift Supervision (OTS) whose pathetic lax 'oversight' caused IndyMac, AIG, Washington Mutual to fail, initiating the economic meltdown of the US in 2008 and was the reason for the bank bailouts has officially been closed.
Posted by JL, a resident of the Del Prado neighborhood, on Dec 14, 2011 at 11:36 am
Actually, according to the Washington Post article cited above, the employees and management of the OTS who failed to regulate the industry are those who failed. Where is their any mention of politicians?
Politicians may have had a hand in the S&Ls failures with their meddling via the Keating Five scandal from over 20 years ago, but this time, with this magnitude of failures and the resulting economic effects, the fault lies only with OTS's incompetent employees who failed to do their duty as regulators, but instead decided to become buddy buddy with the S&Ls they were charged to regulate.
Posted by Mrs. B, a resident of the Mohr Park neighborhood, on Dec 14, 2011 at 12:24 pm
JL, I read the article. I am not saying the OTC is not culpable. I am saying they did not cause the meltdown. The financial mess we live in and suffered threw in 2008 began back in the Clinton era. The repeal of Glass Steagall put the ball into play. There have been many greedy elements to this mess, everyone of them backed by a politician.
Have you read "Street Fighters"? I think you would find it interesting. Do you know anyone in the brokerage industry? Talk to them, get their take.
Posted by JL, a resident of the Del Prado neighborhood, on Dec 14, 2011 at 12:35 pm
The repeal of the Glass-Stegall Act and the passage of the Gramm–Leach–Bliley Act in 1999 did help create the large institutions that led to the housing market collapse and financial crisis, but in fact the fundamentally flawed Office of Thrift Supervision (OTS...not the OTC as you refer to it) failed to regulate the industry at all. In the 1980s, much earlier than that, when OTS was initially called the Federal Home Loan Bank Board, it failed to regulate it as well. And this was way before the repeal of the Glass-Stegall Act.
Maybe it is because their hiring practices (OTS) did not screen out incompetent regulators or maybe it is because their culture did not foster saying 'No' to any wild speculative investment strategy that a savings and loan wished to pursue, including sub-prime mortgages.
Needless to say, regardless of its root cause, having no checks and balances and having a bunch of incompetent OTS 'Yes' people that rubber stamped everything caused this country's latest financial meltdown.
Posted by Mrs B, a resident of the Mohr Park neighborhood, on Dec 14, 2011 at 1:37 pm
Obviously, "OTC" was a typo. I used the correct acronym in my first reply to you. I think we can agree that regardless of the root causes, as you stated, the lack of check and balances caused the mess we are in. Could it be JL, that we play for the same team, just different positions? May I ask what your profession is?
Posted by JL, a resident of the Del Prado neighborhood, on Dec 14, 2011 at 2:44 pm
I don't know what you are talking about, inquiring message board user, but anyway....back to the original question.
Most of the savings and loans are shut down so none of those OTS staffers could escape there - so back to my original thread question - the agency has been shut down so where are all the ex-employees (hopefully not still employed doing any regulatory function). So the original question was and is:
"Where have all of these awful OTS staff that did not perform actual oversight or financial management governance of the industry go? Are they still somewhere in the government? I hope not!!!"
Posted by Jeff Baker, a resident of another community, on Dec 14, 2011 at 3:19 pm
As a former community banker who was regulated by OTS I can say that OTS was a major cause of the meltdown. The management and staff at OTS were concerned with doing whatever it took to keep their jobs including advocating risky lending and turning a blind eye to the practices of its regulated institutions. Unfortunately many of the ex OTS employees are employed by the OCC, the others are collecting fat government pensions and benefits while millions of working families suffer because of the OTS employees concern with thmeselves.