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Wednesday, September 02, 2009
Should Bank Regulation Be Up To One Federal Regulator?
Busted, the Book
by Jeff Sovern I've been listening to the audio version of New York Times reporter Edmund Andrews' memoir, Busted: Life Inside the Great Mortgage Meltdown (a portion of the book was published in the Sunday Times magazine under the title My Personal Credit Crisis; we blogged about it here).
Lots of books have been written about the foreclosure fiasco from the perspective of the economy as a whole or the lenders who made the loans, but this is the first book I've seen written from the perspective of a borrower. Despite his expertise as an economics reporter, Andrews accumulated excessive debt and ended up defaulting on his mortgage. For those of us who do not deal regularly with consumers snared in the subprime meltdown, this book helps explain how even sophisticated people became trapped, though I suppose it can be dangerous to generalize too much from the account of a single person, espcially one who may not be typical of such borrowers. Andrews weaves his personal story together with a look at what was going on in the broader economy.
The book has been criticized for not disclosing that Andrews' wife had previously filed for bankruptcy, and perhaps we can infer from that that Andrews may not have disclosed other information that would put at least his wife in a bad light. Nevertheless, I'm finding the book useful in gaining a real world perspective on the travails of consumers who borrowed more than they could repay.
One note relevant to the proposal to transfer the Fed's jurisdiction over consumer protection matters to the proposed new Consumer Financial Protection Agency: Andrews observes that the Fed Governors consider the Fed's consumer affairs committee "a backwater." Andrews doesn't cite a source for that proposition, but if it is true, it underlines again why the Fed is not the right agency to protect consumers, and perhaps why the Fed waited so long to use its HOEPA authority to prohibit bad mortgage practices.