Where were regulators when banks were failing:
When ANB Bank of Arkansas failed last year, it was easy to blame executives whose pursuit of high-adrenaline growth led to the bank’s demise. But now other key culprits have emerged in ANB’s collapse: the government officials who were supposed to be policing the bank.
The inspectors general at the U.S. Treasury and the Federal Deposit Insurance Corp. (FDIC) have both issued reports saying that bank failures surged because regulators in some cases didn’t step in and prevent hazardous behavior, and in others actively helped banks hide their growing problems.
As early as Wednesday, the Obama administration is set to release details of a new regulatory framework for the vast and complex financial system of commercial and investment banks and brokers that has evolved in the last few years. However, the recent reports from the inspectors general highlight that bank regulators failed to do their job properly even when supervising far simpler banking institutions, showcasing the difficulty the administration faces in ensuring the new supervisory system will work effectively.
Good piece. I’m wondering if Obama’s cautiousness will mean that the new regulatory structure they are proposing will not go far enough.
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