FDIC on Abuses: Brokers Part of the Problem

Federal Deposit Insurance Corp. Chairman Sheila Bair said Wednesday that mortgage wholesalers "need to know" who they are doing business with and blamed the subprime crisis partly on unregulated loan brokers.Speaking before a New York Bankers Association meeting in Washington, Ms. Bair -- in response to a question from the audience -- said brokers "are a big chunk of the problem … but we don't regulate brokers." Of the three largest subprime wholesalers in the United States -- Countrywide Home Loans, HSBC Finance, and Option One -- two (Countrywide and HSBC) are depositories, but just HSBC is regulated by the FDIC. On July 16, the FDIC's Advisory Committee on Economic Inclusion will explore the subprime mortgage crisis. One panel will be devoted to the role loan brokers played in the mess.