Bank Lawyer's Blog

Watters v. Wachovia: Oral Argument Over

Oral arguments yesterday in Watters v. Wachovia went as expected (or, at least, as this ignoramus expected), with Scalia getting the only laugh and Thomas once again remaining silent (but deadly?), perhaps because he had recused himself and wasn't present. My previously expressed wishes for a Thomas yuk-fest breakthrough went unfulfilled. He was probably intimidated by the recent poor showing of Michael Richards in the "comedy arena" and didn't want to try his luck. Justice Ginsburg didn't rant ala Dennis Miller, as I had hoped, but it's apparent that she's been reading the briefs. She caught onto the connection between a "division," a "department" and an "operating subsidiary," at least when it comes to the OCC.

I'll leave the parsing of the nuances to those more adept at it than I. I've read reports that Wachovia's counsel seemed to get the worst of it, but I don't see that from a reading of the transcript. Maybe you had to be there.

I'm sometimes surprised when certain justices end up so far from where they appeared to be during oral argument. When a justice says that he's "concerned" about an implication, and then permits counsel to take off uninterrupted, you might smell a set up.

I'd expect Scalia and Roberts to be the best bets for Watters based upon their comments, although Scalia asked tough questions of both sides. I also thought Scalia's and Roberts' back and forth with Sri Srinivasan ("quick, say 'Sri Srinivasan' fast, three times!") was a fairly good exchange.

To me, Justice Ginsburg appeared to be the OCC's best buddy, although one reporter thought she leaned toward Michigan. Justice Kennedy definitely seemed pro-Wachovia. Justice Stephens referred to Mr. Long as Mr. Blanchard, so I'm not certain whether he's been taking his medicine in the proper dosages. He appeared to be hung up on "field preemption." As Long  put it in so many words, "If that floats your boat, right on, and I've got two other ways to reason your way to support of the OCC if you fall out of love with that one." It's always nice to have more than one peg upon which to hang your hat.

Justice Breyer also mentioned "fielding," but I assumed he was talking about Derek Jeter's skill set.

Blanchard was gang tackled right off the bat (which happens), and Long a little bit less so, but both held their own. Overall, however, there's usually never enough time in those sessions to do more than shoot yourself in the foot, if you're so inclined. No one seemed to do so, although interested partisans may disagree.

Of course, afterward, both sides thought that they'd done well, and both predicted victory.

Now, let's hope that over the next six to eight months, the law clerks educate the justices on just what a national bank's operating subsidiary actually is. Based upon a few of the questions, some of them have a way to travel until they're up to full speed.

Only one laugh, though. That's 1.9 laughs under the Roberts' Court average. It's also half of what Justice Scalia got yesterday in Massachusetts v. EPA.

Then again, greenhouse gasses are a lot more amusing than the OCC. According to states' rights advocates, they also smell better.

New Banks? Never Enough In N.C.

In August, we noted that North Carolina seemed to be on a torrid pace in chartering new banks. There was stark disagreement between experts in the state as to whether or not the state was "over banked" with community banks. The state bankers' trade group argued that there was plenty of room for new banks, while a UNC-Charlotte professor, Tony Plath, argued that the state was "saturated." Both sides pointed to the state banking commission's approval of new bank charters as either evidence to support the trade group, or as no evidence at all.

Now, the North Carolina Banking Commission's staff has weighed in on the side of "the more banks the better."

In a slide show that amounted to a statistical tour de force, the staff of Banking Commissioner Joe Smith concluded that, based on the history of recent startups, the market still has ample room for new players.

"This is an ongoing issue and something we examine from time to time," Smith says. "To date, however, we think our de novo banks have performed reasonably well and that the marketplace hasn't become saturated."

Adds Ray Grace, who works in the commission's Applications Division, "The conclusion is pretty strong."

One of the Commission members, Thomas Keen, is not so keen on the plethora of new bank charters. Notwithstanding the staff's appraisal of the situation, Keen is concerned that there are not only too many banks, but too many "specialty banks."

"Keeping a healthy banking environment is harder with specialty banks," he says. "And everybody wants to keep a healthy banking environment."

Who could stand up (or even squat) and proclaim that they're for an "unhealthy banking environment"? Other than Osama bin-laden, I mean. We all know that he hates all things Western, including healthy banks.

Professor Tony Plath was previously quoted as stating that the Commission does not determine whether or not the banking environment can support new banks, but only whether certain other regulatory requirements have been met by the applicant for a new bank charter. Thus, the Commission's approval of a new charter application is no evidence that the Commission does or does not think the state of North Carolina has too many banks.

Tony's not wild about what he apparently considers these latest "gratuitous" findings of the Commission's staff.

Tony Plath, a University of North Carolina at Charlotte finance professor and a student of the state's banking industry, says there is ample room on the banking commission for disagreement over the issue of how many banks is too many.

At the same time, he says, the commission's only responsibility is to make sure that bank applicants have raised the required capital to open their doors and that they have met all other regulatory requirements.

"It's not their job to get in the way of the normal competitive dynamic in the market," he says. "Those that follow the rules (in the startup process) should be allowed to compete."

You could read Tony's comments as conveying a slight tone of annoyance that the Commission's staff overstepped its bounds and poached on an area better left to professional economists. Or college professors.

My invitation to well-heeled Tarheels still stands: if you run out of room in North Carolina, we still have some here in The Great Republic. People with money to burn are always welcome to burn it here.

 

An Inside Job

According to Reuters, banks should be more like the Roman god Janus: looking both outward and inward simultaneously, at least when the object of the bank's attention is identity theft.

Banks are pouring money into building formidable defenses against computer hackers, but are only just waking up to what may be a bigger threat--the physical theft of client information by people in the office.

"You can have a fortress-like security system, but if you are not terribly discriminating with consultants and temporary employees, that is a terrible vulnerability," said Carmen Oveissi Field, a New York-based consultant on computer crime.

"If people can get physical access (to a bank's systems), the game is over," said Oveissi Field, managing director of Daylight Forensic & Advisory, a security consultancy.

I don't completely agree with that statement, although it has merit. Certainly, physical access gives a smart crook a tremendous advantage. On the other hand, if the bank has proper computer access security procedures in place, and those procedures are being followed, the game should not be "over" at that point. Pounding on the keyboard of a personal computer that you're "locked out" of using by some simple security procedures should be a futile activity for any crook.

In what many regard as the biggest wake-up call in recent memory for financial institutions, thieves disguised as cleaning staff last year nearly stole the equivalent of more than $400 million from the London branch of Sumitomo Mitsui.

They installed programs to record keystrokes on computers that were used to handle international wire transfers of money.

After analyzing user identifications and passwords recorded by the keystroke-logging programs, they used the information to make a huge money transfer to an Israeli bank, but were foiled at the last minute when police were tipped off.

"What banks worry about is that they may have a combination of weaknesses such as staff vetting and physical security, which when put together can let a sophisticated attacker get at their real crown jewels," said [PWC partner Chris] Potter.

Banks are starting to respond to the threat by combining teams working on physical and information technology security, which traditionally have been separate functions, said Potter.

The case as reported in the Reuters article raises many questions regarding potential lapses in physical security, vendor due diligence, and information security monitoring. How could people "posing" as a cleaning crew get access to the premises, much less to personal computers? How were they able to install key-logging software on personal computers? Were the personal computers without even the first line of defense (password protected)? Did the bank monitor which computers were being used to access sensitive information?

I'm not sure that you need crooks as sophisticated as Thomas Crown to do what those cybercrooks did. It sounds to me (admittedly, someone without all the facts) that perhaps the bank in question might have had some less-than-robust security procedures in place when it came to verifying the l egitimacy of the cleaning people. Then again, I could be wrong and the masterminds of this caper were possessed of a brilliance worthy of a movie starring Catherine Zeta-Jones. Of course, any movie worth seeing ought to star Catherine Zeta-Jones.

Chris Potter's observation that banks are starting to combine IT and physical security teams is certainly consistent with what we're seeing. Physical security and IT security officers need to be talking t one another and coordinating their efforts.

Another lesson that we've harped upon before is that you can't be too careful in vetting your employees. When it turns, the worm within can cause a lot of damage.

The same applies to your outside vendors, and not just those that will handle personal information in the course of their normal duties for the bank. As this case shows, even the cleaning crew can pose risks that the average banker might never expect.

Post Mortem on Gottfried's Resignation at HUD

Martha Bridegam of HousingFinance.com asked me in the comments section to her blog last week, what my take is on the resignation of Keith Gottfried as General Counsel of HUD. My initial reaction was the same as most observers: I was surprised and disappointed. When Mr. Gottfried announced in June that he was planning to institute a "No Action" letter process at HUD that would be similar to the process used by the SEC, I was pleased. As I observed at the time (amidst the usual throw-away snarkiness on Bank Lawyer's Blog):

If HUD makes no action letters available publicly, which would be expected given the SEC model that Gottfried proposes to use, you'll be able to gain guidance as to the parameters of transactions that have worked for others. That very "transparency" of the process might (perversely) deter the occasional client who believes that he has constructed the "better mousetrap" and doesn't wish to share his "brilliant innovation" with potential competitors. However, if there's any doubt, prudence will dictate that you obtain a No-Action Letter.

What's not to like?

As Martha noted last Monday, there's been speculation in the press and in the "blogosphere" that his resignation was the result of his advocacy of "transparency," which might have engendered a typical bureaucratic knee-jerk negative reaction. There's also idle speculation that "forces of darkness" within HUD have something to hide, although that sounds a bit too "Oliver Stone-ish" to me. Martha also linked to the Dow Jones Newswire story (by reporter Damian Paletta) that suggests that his resignation is related to HUD's Inspector General's investigation into allegations that HUD Secretary Alphonso Jackson has pressured staff to award contracts to friends of the Bush Administration and to deny contracts to the Administration's opponents.

"I have heard rumors," Gottfried said, according to the IG report. "I've heard rumors from time to time that, certain people, being friends of the Secretary, that there was - I think the statement I heard is the Secretary would like for us to work with vendor, would like for HUD to work with this vendor. I have heard that statement from some folks."

Gottfried also told the IG that he wasn't "close" to Secretary Jackson, and was not part of Jackson's "inner circle."

A HUD spokesman denied the connection between Gottfried's statements to the IG and his resignation, of course. In a letter sent to friends and colleagues, Gottried didn't shed much light on that aspect, stating, "As some of you may have recently heard, I have decided that the time has come for me to pursue other opportunities and challenges. Accordingly, after struggling with my decision for weeks, on Oct. 20, 2006, I delivered to President Bush my resignation as general counsel of the U.S. Department of Housing & Urban Development, effective as of Nov. 5, 2006."

The "leaving to pursue other opportunities and challenges" line is one often used as code for either "I was pushed out the door" or "I couldn't stand another second in this snake pit."

As the Dow Jones' Paletta notes, Gottfried is the third general counsel to leave HUD under Jackson's brief tenure (less than three years). That could mean nothing more than bad luck, or that Jackson's simply a hard man to get along with. It might even mean something more sinister, but at this point, there's no smoking gun.

Regardless of the organization, when the general counsel is not part of the CEO's "inner circle," that's a dysfunctional relationship. The chief legal officer of the organization must have the ear of senior management (and of the "board of directors" or its equivalent), as well as its backing, if the organization is to stay on the true and narrow path. Recent history is full of instances where general counsel was either excluded from the "inner circle," with disastrous results for the organization, its employees and stakeholders. Shutting out your lawyer is often a sign that there's trouble at the top.

Although the jury's still out on the reason for Gottfried's resignation, and what, if anything, it portends for HUD, I'm personally sorry to see him go. I'm not the only one.

In his resignation letter, Gottfried noted that he was “proud, that as general counsel, I have been able to lay the framework for enhancing regulatory transparency and compliance assistance at HUD, two of the causes that I have championed since the day I was sworn-in. I continue to believe very strongly that enhancing regulatory transparency and compliance assistance are critical initiatives that need to be vigorously championed.” But the industry is left wondering what will happen to Gottfried’s proposals now that he is no longer “vigorously championing” them at HUD.

We'll see.

Happy Bird Day

This Blog is "off the air" until November 27.

Y'all (or Ya'll, if you prefer) have a happy Thanksgiving.

CreditUnionsSuck.Com

According to recent press reports, the battle between commercial banks and credit unions in Massachusetts is getting downright nasty.

The Massachusetts Bankers Association escalated its drawn-out war with credit unions last month when it launched its CreditUnionRuse.com Web site.

The site paints a scathing picture of credit unions as ever-expanding financial institutions that cost taxpayers tens of billions of dollars under an exemption granted them 70 years ago. It's an old flap, one that credit unions counter by saying they are community-based organizations striving to offer the services their members demand.

Banks have long been irked by the tax-free advantage that credit unions have enjoyed. As long as credit unions remained relatively insignificant players in the competition for customers, banks left them alone. However, in recent years, credit unions have been pushing the envelope of "membership," and expanding their banking services, to the point that they're drawing increasing flak from banks. The Massachusetts Bankers Association web site raises (or lowers, depending upon your viewpoint) the fight to a new level.

"We're asking for a level playing field," said Bruce Spitzer, director of communications for the Massachusetts Bankers Association. "Let the market dynamics decide what prevails. But it's not a level playing field if these credit unions don't pay taxes."

The Lowell Five Cent Savings Bank is facing stiff competition from Jeanne D'Arc Credit Union, which has 13 branches in the Lowell area. Glenn Goldman, the bank's compliance and security officer, said the neighboring credit union has only slightly less assets than his bank's $700 million, yet has no tax liability. The credit union's infringement on commercial customers cuts deeply.

"A credit union can do the great majority of things that a bank can do, but at a 40 percent tax advantage," he said. "We're trying to compete for the same depositors, for the same borrowers, and now for the same commercial depositors and borrowers, but at a significant disadvantage because of the tax issue."

Both sides admit that the issue is a political one and, no matter how much clout commercial banks have at the state level, that clout is likely to do them little good.

Because federal law does not tax credit unions, he said, changing the state law would not accomplish what the banking industry is seeking. Local credit unions could simply switch their state charters to federal ones, thereby dodging all state control, he said.

"I have never supported and do not support now the taxing of credit unions," said [state Senator Andrea F. Nuciforo Jr.]. "It's a simple answer. Federal law does not permit it. It wouldn't improve our situation. We wouldn't generate any more revenue, and it would take from the state the ability to regulate these institutions."

If banks really want to "take it to the mat," snarky web sites directed toward consumers are not likely to get the job done. What a consumer cares about is who offers the lowest loan rate and the highest savings rate. Period. He or she cares not a fig for your "ruse" arguments.

Fuel those engines of change, my banker friends. You know what I'm talking about: PACs. Contribute soon and often to your favorite federal legislators' campaigns and remember the sage advice of Abraham Lincoln's Secretary of War, Simon Cameron: "An honest politician is one who, when he is bought, will stay bought."

Unfair and Unbalanced

Not wanting to waste a good rant, I feel compelled to follow up Saturday's screed about the posting by the Conference of State Bank Supervisors of Watters v. Wachovia of briefs on its web site, with a snarky comment about the OCC.

Yes, it's true, I generally defend the OCC in its quest for world domination through federal preemption. Yet, I sometimes feel the need to betray my principles in order to remind myself that, as a lawyer, my clients' values are my values, and if a state-chartered bank inadvertently were to drop a money clip filled with unmarked 100 dollar bills on my ergonomically correct executive desk chair while I was sitting in it, well, I'd "pimp that ride" like a '79 El Dorado. I'd be spinning the horrors of federal preemption like Eliot Spitzer. Shameless? Yes. Shameful? Never.

If I may pervert the American Beef Council's catch-phrase (which, I understand, would make me a sex offender in Montana): "Cash...It's what's for dinner."

In fact, I believe it's in the Code of Professional Responsibility somewhere that "if you're paid in cash, all bets are off." Maybe that was an ethical consideration embodied in the State of Nevada Code.

But back to the OCC.

I was pleasantly surprised this morning to receive an e-mail notification of this press release from the OCC, that announced cooperation between the OCC and the CSBS in assisting consumers in identifying the correct bank regulator to complain to when a bank has "done them wrong." One never likes to piss and moan ad infinitum regarding how poorly one's local financial institution has treated you and then find that you've been remonstrating to a regulator that, like Rhett Butler, frankly doesn't give a damn. Far better to have one's "Dear Sir or Madam" letter delivered straight to the proper regulator, who will then ensure that it's placed in the appropriate circular file and, following an extended bout of "talk to the hand," is shredded, after which all evidence of its receipt will be extinguished and its existence thereafter denied.

I mean, if you're going to get the brush off, at least have it come from the correct bureaucrat, don't ya' think?

Well, the warm and fuzzy feeling that overwhelmed me upon reading that good news quickly evaporated when I clicked on a new addition to the "Features" section of the OCC's home page entitled "Amicus Briefs: Watters v. Wachovia" and discovered, to my abject horror, that only briefs favorable to Wachovia had been included on that page. Nary a brief supporting dear Ms. Watters could be located anywhere in the vicinity of that page or any other page on the entire web site. Contrast that absence, if you will (or even if you won't), with the Conference of State Bank Supervisor's web page that contains links to the briefs filed in that case. The briefs of both sides are included on the CSBS site. At least, they're supposed to be. I haven't actually clicked on those links, since that would entail reading something about the case, which I try not to do so as not to clutter my prejudices with facts or logic.

Now, what the OCC has done just goes against the grain of fundamental fairness that courses through the very marrow of the bones of Bank Lawyer's Blog, not to mention of this great country that I like to call "The United States of America." What is the OCC, nothing more than a bevy of "Spin Meisters," a bunch of flaks, a collection of propagandists? Oh, yeah, I already blogged about that.

Well, this calls for a re-evaluation of my entire view of the CSBS, if not of life itself. Any trade group brave enough to post arguments both for and against a position that it supports has to be given not only a hat tip, but also a click of the heels, a short arm salute, and a quick bark of "Sig Heil."

In addition, I must now reluctantly concede a position that CSBS General Counsel Buz Gorman has asserted for quite some time: the CSBS web site is the only bank trade association or regulatory agency web site that can, with a straight face and a crooked smile, claim that the reporting there is, as it is on Fox News, truly "fair and balanced."

Just like Bill O'Reilly.

"CSBS reports. You decide."

"No BS at CSBS."

FTC Settles With Guidance Software

Last December, Guidance Software, the leading provider of software used to diagnose computer security breaches, announced that its computer system was hacked. Not only did Guidance fail to discover the hacking for three months, but it was discovered that personal information, including credit card numbers and CVV numbers, were stored on Guidance's system in unencrypted format (in violation of merchant guidelines established by MasterCard and Visa). Among the personal information exposed was information belonging to the FBI and the Secret Service. 4,000 credit numbers were stolen by the hackers.

Last Thursday, the FTC announced that it had settled charges against Guidance arising out of the incident.

The settlement requires Guidance to implement a comprehensive information security program, including independent, third-party audits every other year for the next ten years.

The company also will be subject to standard record keeping and reporting provisions to allow the FTC to monitor compliance.

As is customary in such cases, the FTC's charges involved allegations that the defendant engaged in a deceptive trade practice.

According to the FTC, Guidance's privacy policy included such statements as "[Guidance] takes every precaution to protect our users' information" and "your information is protected both online and offline."

Guidance also claimed users' information was protected "with the best encryption software in the industry –- SSL."

The FTC complaint alleges that though Guidance employed SSL encryption, it stored the data in clear, readable text and did not adequately assess the vulnerability of its network to intrusions such as structured query language (SQL) injection attacks.

In addition, the FTC said Guidance failed to use readily available security measures to monitor and limit access from the corporate network to the Internet.

[...]

"In truth and in fact, [Guidance] did not implement reasonable and appropriate measures to protect sensitive personal information it obtained from customers against unauthorized access," the FTC complaint states.

According to the FTC, Guidance's failure to adhere to its own privacy policy constituted a deceptive trade act.

Guidance did not respond to telephone or e-mail requests for comment.

What are they going to say? "Oops! My Bad!" Somehow, that doesn't seem to be sufficient.

Talk about reputational risk! My guess is that Guidance is hoping that with the settlement of these charges, the sooner they put this behind them, the better. In that light, the less said the better.

Buried in this story is another lesson for all businesses that post a privacy policy, including banks. Whatever you say, you'd better be able to stand behind.

Personally, I think that bald statements like the ones used by Guidance in its privacy policy are ill-advised. "[Guidance] takes every precaution to protect our users' information" and "your information is protected both online and offline" are blanket guarantees. If you haven't taken every single precaution possible to protect the information, you've breached the guarantee. It's a practically impossible guarantee to meet.

I realize that privacy advocates, and "certification" entities like eTrust, want businesses to make strong guarantees of privacy and security. On the other hand, attorneys for the businesses would advise them to be cautious. If you say it, they will come. Instead of customers, however, the "they" is likely to be the FTC or, in the case of financial institutions, your primary regulator. In either case, the business may be setting itself up for a hard fall.

If you're going to let your marketing department or your IT personnel draft your privacy policy, at least run it by your lawyer before you post it.

No Good Deed Goes Unpunished

Good grief!

I realize that I stated in a previous post that the Conference of State Banking Supervisors had informed me that it intended to post on the CSBS site the briefs filed by Wachovia Bank and its supporters in the pending US Supreme Court case of Watters v. Wachovia. On the other hand, I didn't say WHEN the CSBS would post them. Certainly, I never guaranteed that those briefs would be posted by any particular date. How could I? This may come as a shock to some people, but I'M NOT THE CSBS!

Well, they're posted now. Here.

Stop bugging me about it. Sorry all this free stuff, provided solely for your personal convenience, isn't provided quickly enough for some of you ciphers and freeloaders. I'm certain that the CSBS will try to speed it up in the future so those of you billing your clients, or researching papers for your school projects, aren't unduly inconvenienced.

Oh, and "you're welcome."

Ingrates.

Countrywide Goes For A Thrift Shop

Notwithstanding decisions this year by Capital One and Citicorp to move assets from their federal thrift charters to national bank charters, at least one large financial institution announced last week that it has decided to go the other way (free registration required).

Countrywide Financial Corp., the biggest U.S. mortgage lender, has told regulators that it wants to apply for a federal savings bank charter so it could work with one U.S. regulator instead of two.

If the change is approved, the Countrywide Bank unit would become a federal savings bank, and the parent company would convert to a savings and loan holding company, the Calabasas-based lender said in a statement [November 10]. The Office of Thrift Supervision would be the sole regulator of both.

The announced reasons for the shift from a national bank charter to a federal thrift charter are understandable:

• Only one regulator for both the holding company and the bank (the OTS, rather than the OCC for the bank and the FRB fro the holding company).
• Less onerous capital restrictions under Basel II.
• A more "understanding" regulator for a business plan focused primarily on residential mortgage lending.

The stock market obviously agreed with the decision. Countrywide's share price rose 3% on the day the charter shift was announced.

The American Banker (paid subscription required) went beyond the publicly announced reasons, and drilled a little deeper into what "outsiders" speculated might be more important reasons for Countrywide to take the federal savings bank route: "scrutiny of alternative mortgage products and federal preemption of state laws."

On Sept. 29 the four banking and thrift agencies issued guidelines setting disclosure and underwriting standards for alternative mortgages. The OTS, with the most experience among the agencies in regulating mortgage lending, is widely expected to apply the guidelines with more restraint than the other agencies.

"The OTS understands the business better, and also, as a class of institutions, thrifts do this business better," said Robert Davis, the lead lobbyist at America's Community Bankers.

"The OTS is a little more relaxed," said one thrift executive. "The other agencies don't understand these products as well, so they are less comfortable leaving some of the management issues to the judgment of the examiner in the field.

"There is no question there is anxiety among the national banks about how the OCC is going to do this on the ground," he added.

The OTS also trumps the OCC in its legal standing to preempt state laws. The OCC is going before the Supreme Court on Nov. 29 to defend its authority to let operating subsidiaries of national banks ignore state laws. The agency has repeatedly won in the Supreme Court, but even its supporters concede defeat is a possibility.

"If the Supreme Court rules against the OCC, the thrift charter will get a boon," said Ronald R. Glancz, a partner in the Venable law firm here.

In May, when Wachovia announced its acquisition of Golden West Financial Corp., I expressed my skepticism about the many predictions by "experts" of the imminent demise of the federal thrift charter. It's not that I fancy myself an expert prognosticator. I can't recall what I had for breakfast this morning, much less have any confidence that I know what has not yet occurred. It's merely that I've been listening to these predictions for nearly 20 years now, and just when you think they might come true, another unexpected event sends the trend skittering in the opposite direction. Such as the possibility of Wachovia losing the operating subsidiary preemption litigation that is pending before the U.S. Supreme Court providing a boost (or a "boon") to the OTS, which has "sounder legal footing" when it comes to federal preemption. By the way, I don't think Wachovia will lose before the SCOTUS, but, then again, I bet on the Broncos over the Cowboys in the 1978 Super Bowl, so listening to me can be risky.

There are those, like JJ Hornblass of BankNet360.com, who, in the comments section this this post, call for the abolishment of the OTS. While that idea picks up steam from time to time, I think that JJ will be disappointed if he thinks that that particular event is on the near-term horizon. As Countrywide's decision demonstrates, by continuing to make itself a comparatively understanding (if not "easy") regulator for residential mortgage lenders who plan to do business nationally, the OTS appears not quite ready to go the way of the dodo.