An in-depth Wall Street Journal story titled: “FDIC Faces Mortgage Mess After Running Failed Bank” with a sub-head of “Subprime Lender Made Problem Loans On Regulators’ Watch” reported this:
“The unusual situation… stems from the 2001 seizure by federal officials of Superior Bank FSB, then a national subprime lender based in Hinsdale, Illinois. Rather than immediately shuttering or selling Superior, as it normally does with failed banks, the Federal Deposit Insurance Corporation continued to run the bank’s subprime-mortgage business for months as it looked for a buyer. With FDIC people supervising the day-to-day operations, Superior funded more than 6,700 new subprime loans worth more than $550 million, according to federal mortgage data.”
Why does this matter in 2016 to the people of Texas? Because in the runoff for the GOP nomination for Texas’ 19th Congressional District, is a Washington-insider who brags about how well he worked in the D.C.-environment, one Jodey Arrington who was chief of staff of the FDIC at the time. According to a whitewash of the issue in the Lubbock newspaper, “Arrington said simply that the FDIC does not make loans” as his defense.
But, the subprime lender did make loans, over half-a-billion dollars worth of the speculative, nasty loans, the very loans that lead to the crash of the U.S. economy, while the FDIC was directly operating the firm. Arrington’s FDIC eventually pawned the dirty operation off on another bank, convincing Plano, Texas-based Beal Bank to take it over. Arrington’s FDIC so fooled Beal in that deal that Beal Bank sued the FDIC and ended up settling for $90 million in damages.
Jodey Arrington is right about one thing, he does work well in the sordid Washington, D.C. world. The slimy actions of the FDIC under his leadership well represent how Washington works and costs us in the process. Arrington may indeed need to get back to his D.C. buddies, but he should not do so as a member of Congress from Texas.
On 9 May 2016, the Arrington campaign sent out what it called a “fact check” on this issue. However to those who understand English well, it is nothing more than talking around the central issue.
The campaign wrote:
Glen’s FALSE Attack: “Under Arrington’s leadership, the FDIC ignored the housing bubble, made thousands of sub-prime loans, and then dumped them on other banks, costing taxpayers nearly $90 million.”
FACT CHECK #1: The failure of Superior Bank happened in July 2001. Jodey was not at the FDIC when this happened. He began his tenure at the FDIC on December 2, 2001 – 5 months AFTER this occurred.
[This doesn’t matter, the issue covered by the Wall Street Journal isn’t about when the bank was taken over by FDIC, it is about how the FDIC ran the bank and Arrington was there during the time the questionable loans were being made. – Pratt]
FACT CHECK #2: The FDIC is funded by insurance premiums paid by member banks – NOT taxpayers.
[Taxpayers bailed out many, many banks after the debacle which was caused by the very loans the FDIC kept letting the bank made while it ran it. Thus, it did cost taxpayers. – Pratt]
FACT CHECK #3: The FDIC settlement over the Superior bank failure occurred in 2008 – Jodey left the FDIC on December 31, 2006, two years before this settlement.
[The settlement came at the end of a very long legal suit brought by the Texas bank the FDIC pawned the failed bank off on. The bad actions which led to that lawsuit happened while Arrington was at FDIC. – Pratt]
Overall, a very weak response to the issue. But, better than when the campaign called the whole thing a lie with the very misleading line about how the FDIC doesn’t make loans!
TX19: Arrington’s FDIC record is as slimy as Washington, DC
Robert Pratt
An in-depth Wall Street Journal story titled: “FDIC Faces Mortgage Mess After Running Failed Bank” with a sub-head of “Subprime Lender Made Problem Loans On Regulators’ Watch” reported this:
“The unusual situation… stems from the 2001 seizure by federal officials of Superior Bank FSB, then a national subprime lender based in Hinsdale, Illinois. Rather than immediately shuttering or selling Superior, as it normally does with failed banks, the Federal Deposit Insurance Corporation continued to run the bank’s subprime-mortgage business for months as it looked for a buyer. With FDIC people supervising the day-to-day operations, Superior funded more than 6,700 new subprime loans worth more than $550 million, according to federal mortgage data.”
Why does this matter in 2016 to the people of Texas? Because in the runoff for the GOP nomination for Texas’ 19th Congressional District, is a Washington-insider who brags about how well he worked in the D.C.-environment, one Jodey Arrington who was chief of staff of the FDIC at the time. According to a whitewash of the issue in the Lubbock newspaper, “Arrington said simply that the FDIC does not make loans” as his defense.
But, the subprime lender did make loans, over half-a-billion dollars worth of the speculative, nasty loans, the very loans that lead to the crash of the U.S. economy, while the FDIC was directly operating the firm. Arrington’s FDIC eventually pawned the dirty operation off on another bank, convincing Plano, Texas-based Beal Bank to take it over. Arrington’s FDIC so fooled Beal in that deal that Beal Bank sued the FDIC and ended up settling for $90 million in damages.
Jodey Arrington is right about one thing, he does work well in the sordid Washington, D.C. world. The slimy actions of the FDIC under his leadership well represent how Washington works and costs us in the process. Arrington may indeed need to get back to his D.C. buddies, but he should not do so as a member of Congress from Texas.
Links:
UPDATE:
On 9 May 2016, the Arrington campaign sent out what it called a “fact check” on this issue. However to those who understand English well, it is nothing more than talking around the central issue.
The campaign wrote:
Glen’s FALSE Attack: “Under Arrington’s leadership, the FDIC ignored the housing bubble, made thousands of sub-prime loans, and then dumped them on other banks, costing taxpayers nearly $90 million.”
FACT CHECK #1: The failure of Superior Bank happened in July 2001. Jodey was not at the FDIC when this happened. He began his tenure at the FDIC on December 2, 2001 – 5 months AFTER this occurred.
[This doesn’t matter, the issue covered by the Wall Street Journal isn’t about when the bank was taken over by FDIC, it is about how the FDIC ran the bank and Arrington was there during the time the questionable loans were being made. – Pratt]
FACT CHECK #2: The FDIC is funded by insurance premiums paid by member banks – NOT taxpayers.
[Taxpayers bailed out many, many banks after the debacle which was caused by the very loans the FDIC kept letting the bank made while it ran it. Thus, it did cost taxpayers. – Pratt]
FACT CHECK #3: The FDIC settlement over the Superior bank failure occurred in 2008 – Jodey left the FDIC on December 31, 2006, two years before this settlement.
[The settlement came at the end of a very long legal suit brought by the Texas bank the FDIC pawned the failed bank off on. The bad actions which led to that lawsuit happened while Arrington was at FDIC. – Pratt]
Overall, a very weak response to the issue. But, better than when the campaign called the whole thing a lie with the very misleading line about how the FDIC doesn’t make loans!