Last week, I wrote about the proposed overhaul of the financial regulatory system by Treasury Secretary Henry M. Paulson Jr. I didn't get much feedback from within the mortgage banking industry on that column, but I did hear from Matt Sanchez, one of my favorite syndicated political commentators (he's been on the FOX News Channel and his writing appears in WorldNetDaily and Human Events, among other media outlets). I thought it would be interesting to share his views on this subject, and hopefully encourage industry members to chime in on the debate.
Sanchez stated his support of Paulson's goals, but he also expressed surprise that conservative Republicans didn't get fully behind Paulson's efforts.
‘Paulson has proposed a redefining of the Federal Reserve Bank's role in the American economy,’ says Sanchez. ‘Under the new proposed changes, the Fed will have the added role of market stability regulator. Conservatives cringe when they see the terms 'proposed,' 'regulatory' and 'government' conspicuously flirting in the same sentence, and with good reason. Any move a government monopoly makes, which is essentially what the Fed is, should always come under enormous scrutiny and deliberation. But regulating the economy is one of the few roles for which the federal government has both the supremacy to carry out a mandate, and the credibility to actually get something done.’
In Sanchez's view, conservatives need to acknowledge this is a case where government is actually the hero, not the villain.
‘Those conservatives who want free markets and the government to butt out do not recognize how important government oversight in the economy is,’ he continues. ‘No one complained when the U.S. Mint required watermarks in new $20 bills in order to prevent mass counterfeiting, and yet the current proposal to stabilize markets by basically enforcing the rules is just as important as making sure your local butcher accepts the $20 bill you offer him in exchange for his tenderloin steaks. With robust regulatory powers, the Fed will have more authority and responsibility to enforce solid business practices, which may be the first step of changing the neo-con vision of a culture of ownership back to a conservative tradition of stabilizing solvency.’
Sanchez notes that one of the key criticisms of the Paulson proposals – its focus on the future, not the current foreclosure crisis – is a misplaced slam. ‘The talk of a federal bailout is a sign of the times – the government is treating Americans as customers, promoting money-back guarantees for their patronage, rather than as citizens cognizant of the risks of homeownership and entrusted with the responsibilities of paying their debts,’ he observes.
But the ‘robust regulatory powers’ that Sanchez refers to in the Paulson plan are also not embraced by the Republican's presumptive presidential nominee, Sen. John McCain (see an overview of the McCain approach in Blog View, Mar. 31). While disagreeing with McCain's notion of less regulatory influence, Sanchez notes the McCain approach will actually connect with voters. In fact, Sanchez feels McCain will have an advantage here when compared to proposals floated by the current Democratic presidential frontrunner, Sen. Barack Obama (see the Obama approach, as well as Sen. Hillary Clinton's plans, in Blog View, Feb. 4).
‘McCain, who is a very flawed conservative, represents a status quo candidate and not a radical,’ he adds. ‘Americans want change, but they don't want socialism, at least not the Americans who are accustomed to liberties, wish to pay lower taxes and basically want to get government out of their hair. Yes, Obama has been detailed in his proposals, I agree. I also believe that the more details we hear from Obama, the less persuaded people will be to vote for him, especially those who are expected to pay for those changes. I think it works against Obama, to be frank.’
As for the mortgage industry, Sanchez predicts a flurry of discussion regarding certain reform proposals. ‘The government wants to federalize the process of licensing mortgages, which is of concern for the state rights over federalism debate and a legitimate bone of contention,’ he says. ‘But times have changed, since a borrower can now obtain a mortgage over the Internet and some uniformity of the standards may be in order.’
But that leads to me ask: what is the mortgage banking industry thinking about all of this? Do mortgage bankers believe the presidential race will shape how Washington approaches today's crises, or will the crises determine how the political establishment reacts? And, ultimately, what does it mean for the industry as a whole?
I am very interested in hearing what mortgage bankers have to say. And that's where you, the readers, come in. If you want to join the discussion, please take a few moments to share your opinions with me. I can be reached at hallp@sme-online.com – let's keep this talk flowing in an upcoming column!
I'll give Sanchez the last word on that: ‘Discuss this among yourselves. After all, if there's something that is still free, it's political debate!’
– Phil Hall, editor, Secondary Marketing Executive
(Please address all comments regarding this opinion column to hallp@sme-online.com)
