Friday, October 03, 2008

How to Play the Regulators One off Against the Other

Banks have different regulators depending on what type of depository institution they are and who charters them. This allows some operators to play games. It reminds me of the children running to the father when mom says, "No!" or playing the same trick in reverse when he says "No!" Raymond Lamb was a master at this game and America's fund insuring deposits is $862 million smaller thanks to Mr. Lamb's lending policies.

David Enrich and Damian Paletta write in today's Wall Street Journal, "One key focus in the financial crisis is the way the U.S. regulates banks, a patchwork often criticized as outdated and leaky. To those who say it needs an overhaul, Exhibit A could be a twin bank failure in the Southwest in July."

1 comment:

Maggie said...

This seems to bring up the certain banking crisis and the one in the early eighties. At the beginning of this crisis no one was looking at their credit quality because they had money and weren’t worried. After everything unraveled, it took down major banks across the country. The estimated bank cost of$862 million seemed to me that it actually was a lot more than anyone could have estimated.