To certain extent it's bunch of legal non-sense that goes around in a circle.
The courts, lenders, mortgage fraud plaintiffs, regulatory agencies etc. have been playing legal musical chairs with jurisdiction and culpability for years. The OTS and OCC are not truly Federal regulatory agencies any more than the Federal Reserve is, as the general public was rudly awenked to this fact by the bailout agreement. The OTS and OCC are funded by the banks and do not have the staff or ability to regulate, much less prosecute fraud chain of mortgage transfer and funding and even if they did they have no incentive becuase they are funded by the lenders and have a vesting interest in protecting the lenders and associates. The short answer is the regulatory agency represent the interests of the financial services industry not the borrowers. Do they occasioanly regulate themselves of course when it's in thier own best interest or to maintain an image of accountability. This should answer a couple of questions.
Subprime ‘Culpability’ for OCC, OTS?
PAUL JACKSON October 11, 2007 9:15 pm
A viewpoint published by American Banker, penned by  Arthur Wilmarth at the George Washington University Law School, wonders if the OCC and OTS are as clean as many might think when it comes to the issue of who to blame for the subprime mess:
It is now obvious that wholesale lenders and securitizers, including many of the largest national banks and federal thrifts and their affiliates, were the driving forces behind the subprime lending boom.
The OCC and the OTS maintain teams of on-site examiners at major national banks and federal thrifts. Both agencies repeatedly assured Congress that their examiners are vigilant and effective in uncovering and correcting unsound and abusive practices.
State officials have taken thousands of enforcement actions against predatory lenders, including orders that assessed more than $800 million in penalties against
and Household. Ameriquest However, when the states tried to apply their laws on predatory lending to national banks and federal thrifts, the OCC and the OTS issued regulations preempting those laws.
Wilmarth goes on to lament the “virtual absence of public enforcement actions by the OCC and the OTS to prosecute violations of consumer protection laws by the largest national banks and federal thrifts” and suggests that neither agency should be absolved from blame in terms of the mortgage mess we’re now having to face.
Subscribers can read the full letter — well worth the read.
Article printed fromHousingWire || financial news for the mortgage market:
URL to article:
URLs in this post:
 Arthur Wilmarth: http://www.law.gwu.edu/Faculty/profile.aspx?id=1732  An excerpt: http://americanbanker.com/article.html?id=20071011YCVPUNUN