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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: steve harris who wrote (290203)	11/9/2010 11:42:58 AM
From: Jim McMannis	Respond to of 306849

Battered Obama took part in a 'cover up', says ex-regulator gfsnews.com Following the Democrat Party’s drubbing in mid-term elections, outspoken former regulator Bill Black takes aim at Barack Obama’s “disastrous” response to the financial crisis In a last campaign pitch to voters, US President Barack Obama justified his response to the Great Recession by contrasting it to "S&L", a 1980s and early 1990s crisis which saw nearly 800 savings and loans institutions go bust amid a disastrous commercial real estate bubble. Yet for Bill Black - a former Federal Home Loan Bank Board litigation director who as deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement contributed to a major 1993 report on S&L - it's an analogy which sticks in the throat. "It's a terrible comparison," says Black. In his reasoning, Obama noted that while George Bush Senior's efforts to stabilise the financial system cost two and a half per cent of gross domestic product (or $125m), his own administration's actions have cost as little as one per cent. "In the savings and loans crisis, for 2.5 per cent of GDP we actually resolved the problem," Black guffaws. "In this case, they have resolved none of the problems." In 1991, Congress passed a Prompt Corrective Action law ensuring that insolvent institutions would be wound up, Black explains. Regulators forced bankrupt organisations into orderly receivership, accounting standards were improved, and those suspected of fraud were pursued. In total, more than 1,600 institutions insured by the Federal Deposit Insurance Corporation were closed by the authorities or received government support. "In the savings and loans crisis, we got rid of the phoney accounting that our predecessors had put in place to hide the losses," he attests. "In every case we wiped out the risk capital - both equity and subordinated debt. We went to honest accounting rules and closed the problem institutions." Conversely, claims Black, the President has singly failed to heed the previous experience. Not only have authorities chosen to leave suspected fraudsters in place, but they have protected insolvent institutions by changing Financial Accounting Standards Board rules so that toxic asset losses do not need to be recognised.