The Government Agency That Should Fine Itself

"So I just want to make sure I get this straight. Families get pennies on the dollar in the settlement for having been the victims of illegal activities or mistakes in the banks' activities," she said.

Sen. Warren also criticized the OCC for essentially aiding and abetting the banks to cover up their conduct by failing to deliver evidence of wrongdoing to consumers who may be considering private lawsuits against the banks.

"You have made a decision to protect the banks but not to help the families who were illegally foreclosed on," said Sen. Warren.

This type of behavior is nothing new for an agency that arguably played a crucial role in helping greedy financial institutions destroy the economy. Back in the early 2000s, state regulators began enacting laws and promulgating regulations banning predatory mortgages. These loans, effectively designed to fail, as has been amply documented, were highly profitable for banks, which reaped billions of dollars upfront in sales and securitization fees but had little interest (forgive the pun) in whether the loans were ever repaid.

The OCC then used its federal powers of preemption to supersede state laws. Whether or not the move was intended to protect bank profits, former Chairman of the House Financial Services Committee Spencer Bachus's (R-Ala.) statement comes to mind. Remember? He's the one who said, "Washington and the regulators are there to serve the banks."

If that weren't bad enough, the OCC conveniently failed to promulgate any meaningful rules against predatory lending of its own. Even after this failure fueled the fire of runaway mortgage speculation that caused the 2008 global financial meltdown, the OCC proceeded in 2011 to claim a blanket right to preempt state consumer protection laws, defying the intent of Congress as expressed in Dodd-Frank. The agency continued its war of obfuscation by forbidding banks from handing over meaningful foreclosure and modification data to state regulators.

What we have here bears many of the hallmarks of a rogue agency -- or at best an incompetent one. Despite repeated claims by Comptroller Curry and others that the OCC has learned lessons from its countless mistakes and will improve in the future, it continually fails to protect consumers.

How many chances can we give the OCC? How long can we afford to spend $1 billion a year on an agency that seems to be resolutely committed to not doing its job?

Compare the OCC's performance to that of the Consumer Financial Protection Bureau, which already has a strong record of actually protecting consumers from fraud and promoting a healthier, more efficient banking system.

In less than two years of existence the CFPB has taken action against bank kickbacks to mortgage brokers and lenders, and made steps to more intelligently and effectively regulate payday, auto and student lenders, and debt collectors -- not to mention the hundreds of millions of dollars the agency has collected for consumers harmed by deceptive practices. And it has done all of this on a budget projected at $447 million next year -- half of the OCC's budget.

The CFPB has proven itself to be efficient, competent, responsive and smart in all the ways the OCC has been inefficient, incompetent, comatose and dumb. Both agencies receive their budgets from fees paid by the financial institutions they regulate, but only one is doing its job.

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