Eye on the Bailout

After a 20-hour, all-night session, Senate and House negotiators agreed last Friday on a compromise financial reform bill meant to prevent future economic meltdowns. Just before the bill was being finalized, former SEC Chairman Arthur Levitt wrote a scathing op-ed in The Wall Street Journal, saying the bill was "bled dry of nearly every meaningful protection of investors." Levitt headed the SEC from 1993 to 2001, leaving just before the accounting scandals of Enron and WorldCom erupted, and is now an adviser to Goldman Sachs and the Carlyle Group, a private equity firm.

As the dust settled last Friday, we checked in with Levitt to understand just why he believes the bill, as he says, "totally left investors in the dust." Here are his thoughts on the topic.

Backers of financial regulatory reform are gearing up for the final stretch in a yearlong effort to construct a new, streamlined architecture. But recent reports and testimony about the financial crisis suggest a crucial ingredient in any new structure is in short supply: cooperation among the watchdogs.

A proposal to eliminate one regulator seen by many as particularly weak -- the Office of Thrift Supervision -- could alleviate some friction. A soon-to-be-released federal examination of the Washington Mutual collapse found that OTS resisted efforts by a more skeptical regulator, the Federal Deposit Insurance Corporation, to take a closer look at WaMu, according to an account in The New York Times.

The proposition that Treasury Secretary Timothy Geithner, in his prior job as president of the Federal Reserve Bank of New York, didn’t do enough to rein in banking giant Citigroup just gained new support.

On Wednesday, the Financial Crisis Inquiry Commission disclosed that a peer review study by other Federal Reserve banks in 2005 found that the New York Fed "had insufficient resources to conduct supervisory activities" of Citigroup.

April 15: This post has been corrected.

How many struggling homeowners will get a mortgage modification through the government’s $75 billion program? It would seem to be a simple question. But for the past year, the administration has been saying one thing, and observers have been hearing another.

What the administration has been saying is that the program “will help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments.” Sounds like the Treasury Department is aiming to get 3 million to 4 million modifications, right?

Actually, Treasury’s real goal is between 1.5 million and 2 million permanent modifications, according to a new watchdog report.