By Pam Martens and Russ Martens of Wall Street on Parade
A man holding one of the most important and powerful jobs for keeping the U.S. banking system safe from another epic crash like that of 1929 and 2008 has tongues wagging over the bizarre speech he delivered at the Clearing House Annual Conference last Wednesday in New York.
Keith Noreika is the acting head of the Office of the Comptroller of the Currency (OCC), the Federal agency responsible for supervising national banks and inspecting them for safety and soundness.
What Noreika recommended last Wednesday, however, would make the U.S. banking system significantly more dangerous than it already is. Noreika thinks there is no good reason to prevent giant corporate conglomerates from owning insured depository banks that are backstopped by the U.S. taxpayer. He had this to say in his speech last week:
“The narrative persists to keep commercial interests from owning or having controlling interests in banks, in part, because many view them as ‘public interests’ rather than the ‘private businesses’ they are. In more modern times, this line of reasoning was used to keep companies like Walmart from owning a state-chartered FDIC-insured industrial loan company, while allowing others like Target, to own a credit card bank. The narrative also ignores the fact that banks are subject to a robust regulatory regime to ensure their safety and soundness and compliance meant to protect both markets and consumers.”
Noreika must have spent the last nine years in a coma from which he has just emerged with this insane epiphany. Over the past decade that this Trump appointee has not been paying attention to the failed status of bank supervision, the largest banks in the country have been charged with rigging foreign exchange and interest rate markets, gaming the subprime debt market, fleecing millions of Americans with illegal overcharges and, by the way, collapsing the U.S. economy in 2008 and 2009. Federal regulators allowed the illegal conduct to go on for years without detecting it – think JPMorgan Chase and its regulators allowing Bernie Madoff to launder money through the bank for decades in support of an epic Ponzi scheme. (See JPMorgan and Madoff Were Facilitating Nesting Dolls-Style Frauds Within Frauds.)
Noreika is not some wide-eyed innocent who is simply offering a preposterous position based on naiveté. Prior to his appointment by Trump, Noreika had been a corporate lawyer for the past 10 months at Simpson Thacher & Bartlett LLP. But the real smoking gun is what Noreika did for the 18 years prior to that. He spent those years at Covington & Burling, the law firm that sent multiple lawyers to run the U.S. Justice Department under Obama, including the top post of U.S. Attorney General (Eric Holder) and head of the Criminal Division (Lanny Breuer).
The biggest banks were cozy and safe under those two, with no prosecutions for the biggest financial crash since the Great Depression and, according to the PBS program, Frontline, never even had a wiretap or issued a subpoena in pursuit of a criminal case. (Covington & Burling held a corner office open for Holder to return to and Breuer also returned to the firm following his stint at Justice and is now Vice Chair of the firm)…