Rating: 
Viewed: 119 times.
Print
Just so Ed Hale doesn't think I pick on him alone, my target this week is Wachovia Corp. It seems that Wachovia just can't seem to avoid controversy and law-breaking.
First, the Baltimore Business Journal reports that Wachovia has settled with Federal Regulators to pay up to $144 million over a telemarketing fraud scheme that targeted the elderly. Of course, Wachovia has admitted no wrongdoing. It makes me wondered how much they would have had to pay if they actually admitted wrongdoing.
Second, Federal Regulators are now investigating Wachovia as part of a broader probe of Mexican money-transfer companies. They are investigating laundering of drug profits according to the Wall Street Journal. Michelle Malkin has some pointed insight here.
This raises two important questions. First, how many times does Wachovia get to skirt the law before the Federal Banking Regulators come down hard on their arse? Let's not forget that Wachovia's business is largely insured by the FDIC -- that is you and me as taxpayers, by the way. Are we going to have to bail out Wachovia's depositors one of these days?
The second question, and frankly, the bigger one: who in the hell is watching the hen house? Where have these "Federal Regulators" been for the last decade? We've had scores of banks issuing stupidly assinine loans to stupidly assinine people. We've had banks issuing $500,000 loans in "no doc" (or no document) situations. We've had banks whose own lending units have been massively defrauded by the criminally evil. Why haven't Federal Regulators been able to detect all this-- plus telemarketing fraud and money laundering?
I am rarely one for massive Federal regulation of anything, but banking is different. A stable economy requires a trustworthy and honest exhange market of lenders, depositors, brokers, bankers, and borrowers. Liquidity and sustainability are key hallmarks of a successful banking system. This is one reason why the Federalists -- led by Alexander Hamilton insisted on a single currency under a single Federal authority in the early days of our Republic. It's why the new United States Government in 1789 assumed the war debts of all the former colonies. Frankly, it was the main reason for the creation of the Federal Reserve in the first place. Taxpayers insure the deposits in those banks -- the deposits that are then used to make money for the banks' shareholders. When banks like Wachovia fail to live up to their obligations -- legal, moral, professional, and ethical -- they are not engaging in bad business, but they are breaking a sacred trust with the nation that makes their business possible.
It's the job of Federal Regulators to prevent -- or punish -- that kind of behavior.
I say defenestration for them all.