More on the Elusive FHFA

I don’t know Jim Hamilton, but I thank him for reading HR3321, also known as the Housing and Economic Recovery Act,  and summarizing it here:

http://tinyurl.com/hamiltonjim

One fascinating tidbit which hasn’t gotten much play in the media:

As part of the enhanced oversight, the new regulator must specifically approve, disapprove or modify executive compensation at all of the GSEs. A regulated entity may be required to withhold compensation from an executive officer during a review of the reasonableness and comparability of compensation, and may take into consideration any wrongdoing by the officer.

Additionally, the director of the agency is appointed by the President.  The current ofheo director is the interim director.  It would send a great signal if the President would pick somebody with real lumber rather than expand the powers of a guy who seems like a career bureaucrat.

In any case, all the rearranging of regulatory deck chairs only shines a brighter light on how much of a kluge FM2 have become.   I can’t think of another entity anywhere in the world which is subject to exchange, GAAP and Sarbox rules; is supposedly owned by shareholders who supposedly elect a board of directors; but has their executive comp lorded over by a Presidential appointee who in turn reports to his own board, which includes not one but two Cabinet secretaries (HUD and Treasury).

If good decisions actually get made amidst this Rube Goldberg set up, they will likely be accidental.

Oh, and another thing.  I haven’t read a peep that perhaps its time to throw the whole lot out–management, boards and regulators.  Why on God’s earth would we leave in their seats the same blokes who got us here to begin with?

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