Former U.S. Rep. Mike Oxley, a 25-year Republican who retired in 2006, blames the Bush administration and former Federal Reserve Chairman Alan Greenspan for failing to head off the current financial crisis.
They failed to act in 2005 when it became clear that the subprime mortgage boom was becoming a dangerous trend that would threaten government-sponsored buyers as well as homeowners, Oxley said at a Minneapolis speaking engagement last week.
"[The Federal Reserve] had the tools to police the ever-burgeoning number of 'no-documentation' and low-down-payment and other subprime mortgage products" that have flooded the market," said Oxley, a former chairman of the House Financial Services Committee.
"The number of mortgage brokers was exploding. There was cheap money and patchy state regulation. The brokers were dragging people in and they were targeting low-income and minority communities," he said. "We had old bankers saying: 'What planet are you on?'"
Oxley and other critics charge that the Bush White House and Greenspan's Federal Reserve ignored warning signs as Wall Street rushed to package and sell billions of dollars worth of suspect, mortgage-backed securities to other financial institutions and investors.
Oxley's committee and the House passed a 2005 reform bill that would have put Fannie Mae and Freddie Mac, the huge mortgage buyers that are now in government receivership, on a much tighter leash. They wanted to require more capital reserves and accounting transparency. But the White House failed to support the bill, and the Senate failed to take it up during the mortgage boom.
"I'm happy to be looking at this from the outside," said Oxley, one of the architects of the Sarbanes-Oxley boardroom-reform act of 2002. "The next administration and Congress will have to deal with this."
Oxley predicted that the next president will appoint a "gray beard" commission that will start with Treasury Secretary Henry Paulsen's proposed regulatory reforms.
Oxley was in town last week to receive an award from the Caux Round Table for his work to improve corporate governance and boardroom accountability.And the award goes to ...
The Rochester Police Department will receive an award for its leadership in installing automatic external defibrillators (AEDs) in its entire fleet of patrol cars, an effective tool to counteract sudden cardiac arrest. While national survival rates for sudden cardiac arrest are in the 5 to 7 percent range, Rochester reports a survival rate of more than 50 percent because of the ability of police officers to quickly treat victims with early defibrillation. The city will be honored by the Sudden Cardiac Arrest Association at a dinner Oct. 18 in Philadelphia. (Fridley-based Medtronic Inc. is a big player in the AED market.)Multilingual ads work
Marketing research from the Carlson School of Management and the University of Michigan contends that U.S. firms selling goods in bilingual countries are best off using at least some English when advertising for luxury items, such as upscale vehicles. But they should use the local language when selling necessities such as detergent.
Rohini Ahluwalia of the Carlson School and Aradhna Kirshna of Michigan said a study of consumers in India found that advertisements in English were associated with sophistication, whereas ads in Hindi were associated with reliability.
"People expect mixed language from local companies," Ahluwalia said.
"But from multinationals, it is unexpected, so a customer's attention is grabbed by the second language in the ad," Ahluwalia added.
NEAL ST. ANTHONY, JANET MOORE, DAVID PHELPS