Though credit unions have long been criticized by bankers as holier-than-thou, they've never had the official blessing of a higher power — until last week.Pope Benedict XVI offered a high-profile critique of the financial system, issuing a 144-page encyclical that called for a new international economic structure valuing the social good over individual profit.
"If love is wise," he said in the document, "it can find ways of working in accordance with provident and just expediency, as is illustrated in a significant way by much of the experience of credit unions."
Though he didn't mention bankers by name, his criticisms of the current structure left little doubt he viewed them in an entirely different light.
"It is becoming increasingly rare for business enterprises to be in the hands of a stable director who feels responsible in the long term, not just the short term, for the life and the results of his company," he said.
Like many others, Benedict offered a regulatory restructuring plan, saying businesses should take a more holistic approach.
"There is … a growing conviction that business management cannot concern itself only with the interests of the proprietors, but must also assume responsibility for all the other stakeholders who contribute to the life of the business: the workers, the clients, the suppliers of various elements of production, the community of reference," he said.
The pope met with President Obama on Friday, and the topics they discussed reportedly include the financial crisis. Bankers already oppose a large chunk of Obama's regulatory restructuring plan, much of which is politically popular. They should hope the pontiff doesn't endorse that too, lest they find themselves arrayed against government and religion at the same time.
Between the Code Pink protesters and the wonky microphones, it was sometimes hard to hear what Treasury Secretary Tim Geithner was telling a rare joint hearing of the House Financial Services and Agriculture committees on Friday.Before Geithner had a chance to testify, Financial Services Chairman Barney Frank remarked about the lack of sound quality in the room, which was held in a room normally reserved for the Ways and Means Committee to accommodate extra members.
"The acoustics in this room are terrible," Frank said. "Now presumably when the Ways and Means Committee meets in here, they see that as an advantage."
Frank asked everyone to speak up at the hearing — "especially you, Mr. Secretary. I can't even see you."
Geithner gave a broad wave to indicate where he was seated.
Frank offered sympathy to members of the press, who went to the hearing on derivatives regulation expecting a turf battle between the banking and agriculture committees, which share oversight of derivatives.
"I must begin with an apology to the media," he said. "There is no fight to cover between these two committees. … There will be some disagreements, but they will be based on substance."
The administration made clear last week it is not taking a hands-off approach to its loan modification plan.In letters Thursday to the top 25 servicers, Geithner and Housing and Urban Development Secretary Shaun Donovan told each company to send a representative to a July 28 meeting to discuss inadequate servicer efforts.
Though the officials said implementation of the Making Home Affordable program has coincided with a "significant ramp-up in … trial modification offers," they added that "much more progress is needed."
"We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share," Geithner and Donovan said.
They said the liaison picked by each company should be "authorized to make decisions on your behalf to work directly with us on all aspects of the MHA." Each liaison must send Treasury and a HUD a letter by July 23 detailing the company's compliance with the program.
Starting Aug. 4, the administration will publish monthly results from the program, including the number of final modifications and ultimately the success of those workouts. In addition, they said, the program's compliance team is developing a process to "minimize the likelihood that borrower applications are overlooked or that applicants are inadvertently denied a modification."