We do. If I see loss in a credit when I'm on a bank exam, I call for the loss to be charged off. The sticky part is that this only pertains to commercial credits. Mortgage credit is classified by delinquency under the Revised Uniform Credit Classification and Account Management Policy issued by the Federal Financial Institutions Examination Council in March 1999.

http://www.dallasfed.org/banking/notices/1999/n...

Under this policy, which has yet to be altered, FFIEC states that the Policy is GAAP-compliant. It further states that mortgage loans past due 90 days or more are to be classified Substandard. There is no provision in the policy for assigning a Loss classification to mortgage loans until and unless the loan is actually foreclosed and the property becomes REO. I can look at a mortgage loan and know there's loss in that loan. By the published policy standards, I can't force banks to write down crappy mortgage loans if they're not delinquent.

The life of a field regulator (Hello!!) is a constant battle between the real world and the crazy land of regulatory pronouncements. I can't stray too far afield from the published text or else I'm the one looking like Wile E. Coyote.

Give me better tools and I can make things happen.

A unitary regulator will by defintion be a Federal beast, and this beast will listen to the major players in the industry and water down any unitary regulation to the lowest common denominator.

If you want to fix the business, amend the National Bank Act (governs national banks) and the Home Owners Loan Act (governs Federal thrifts) to state that institutions chartered under those acts must comply with the consumer protection laws in each and every state in which they operate. That'll reverse through legislation the [i]Wachovia[/i] decision.

Second, repeal the provisions of the 1980 Depository Institutions Deregulation and Monetary Control Act that removed from states the ability to regulate rates and fees on first lien loans on dwellings.

We in the states tried hard to stop this trainwreck we all saw coming. The OCC/OTS and SCOTUS told us to stand aside and wait so that we got stuck with the blowback. Uniform regulation means nothing more than a race to the bottom and violently refuses to take into account any state or regional differences in how the business works. Give us state-level regulators the power to regulate everyone who operates in our state and there will be many more hides tacked to the wall than would ever occur under Federal unitary regulation.