Here’s How the Foreclosure Reviews Could Have Been Done Much Faster and Cheaper
Yves here. The OCC made the not-surprising confession in Senate hearings last week that if it had to do them all over again, it would have handled them differently.
On the assumption that the OCC is sincere in its repentance, Michael Olenick offers one way to have executed the reviews at vastly lower cost than the botched process that resulted.
However, there is no particular reason to believe that. As we and other observers said from the announcement of the Fed and OCC consent orders, the IFR was never intended to be a serious exercise. The approach of having bank-friendly consultants hired by the banks assured a compromised outcome. Sadly, Sherrod Brown unwittingly gave the OCC a pass on this issue:
Mr. Stipano, OCC: The critical factors in our minds, first and foremost, is that any consultant that’s brought on have the right resources and expertise to do the job. I mean, that’s separate really from independence, but nonetheless very important. On the independence point, it is not realistic in most cases to expect that independent consultant would have no prior ties to the institution. I mean, they’re used so widely throughout the industry that most consultants that have the resources and the expertise have done work before. So trying to find consultants that are totally pristine in that regard is not really practicable…
Sen. Brown: We’re not – you used the word pristine. We don’t expect pristine here. That sounds too difficult.
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Anything that’s makes them do their job sounds to difficult to me.