JD: I expected there would be some criminal histories. There’s gonna be a few pot possessions and stuff like that. The law said that they were supposed to screen brokers for crimes involving fraud, dishonesty, and “moral turpitude”, which has a pretty broad definition. When I saw the first screen, and one of the first people was a bank robber. I said, “okay, how did a bank robber slide around that definition?”
TA: How many were prevented from getting licenses?
JD: Whenever the agency takes some sort of action against a broker or even an applicant, they have to file a final order, so we went back and looked through all the final orders for denial of licenses that mentioned fraud, dishonesty or moral turpitude. I forget what the number was, but I’m tempted to say twenty-nine from 2000 to 2007.
TA: They had the regulatory power to do this. What was the reason they didn’t? A big part of the problem on Wall Street and across the country has been this laissez-faire attitude toward regulation. Was it philosophy? What caused them to just not do their job?
JD: Nobody ever came right out and said on the record “Jeb Bush appointed us and he’s not a big fan of government, so we didn’t do it.” One of the more telling things that one of the higher-ups at the agency told me; he said “Look, my whole career has been spent regulating guys in silk suits. These mortgage brokers, they’re not bankers. They have little storefronts. Those are guys in polyester suits.”
He said that, and that kind of summed it up for me. These were kind of white-shoe regulators, and the mortgage brokers were, you know…
TA: They didn’t want to get their fingernails dirty.
Read the entire interview here.
Audit Interview: Jack Dolan
CJR, December 19, 2008 09:06 AM