Conservative "Values": Florida's embarrassment of riches... by gimleteye

The Miami Herald reports that Governor Charlie Crist is "still reviewing and trying to pull some information together" on why the State of Florida allowed more than 10,000 felons to become mortgage originators. (Miami Herald, "Regulator no fighter for ban on ex-cons", July 28, 2008)

When the story broke, long-time Herald columnist Carl Hiaasen chipped in a birdie from the golf course: better for the state to encourage felons to work in white collar crime than rolling down your car window and shoving a gun in your face.

I have another point of view, from the fairways of the reality-based community.

The Herald describes Don Saxon, commissioner of the Office of Financial Regulation, whose purview includes the mortgage industry as a "long time state regulator". The Herald didn't come out and say it, but I will: Saxton is a political survivor.

The North American Securities Administrators Association (NASAA) honored Saxon in 2006 with its Blue Sky Award: "You have served investors in Florida and throughout North America with great distinction during a NASAA career that few can match," the NASAA press release glowed. "Your well reasoned, respected, and dignified voice continues to send a clear message to fellow regulators, state and federal policymakers, and the financial services industry, that the best interests of investors must always be served without fail... (Saxon) is a leading authority in strengthening the training of state securities regulators and enhancing the continuing education of financial services industry representatives."

They left out the bit about the felons. How were they to know? There were no regulations governing felons among mortgage originators.

Saxon began his career with the Department of Banking and Finance in 1979 as an investigative supervisor in Miami, the largest municipality in Florida's largest county. In Miami, the epicenter of mortgage fraud and credit crisis afflicting some of the world's largest financial institutions, Saxon's responsibilities then included investigations of banking, finance and securities fraud.

It was Miami, naturally, that sprung George W. Bush into the presidency and also propelled Jeb!, through political contributions from the development industry, for two terms as governor. Jeb! was the designated arbiter of conservative values. His key appointees were expected to toe the anti-regulatory, topless and bottomless adoration of the free market.

Jeb! appointed Saxon as the first Director of the Office of Financial Institutions and Securities Regulation in January 2003. Along with a multitude of career senior bureaucrats, I'm guessing that Mr. Saxon was in the audience that January when the state's top micromanager gave his final inaugural address and famously said: "There will be no greater tribute to our maturity as a society than if we can make these buildings around us empty of workers; as silent monuments to the time when government played a larger role than it deserved or could adequately fill."


To the assorted bureaucrats like Mr. Saxon, Jeb's meaning was clear: it was an anti-regulatory jihad to caution a class of public servant institutionally averse to rocking the boat even under the best of circumstances, except as the boat may rock after a night of martinis and post-prandials at Tallahassee watering holes where deep pocketed lobbyists from the financial services industries talked about the big problem of finding enough mortgage originators to feed the insatiable, never-ending demand for housing.

Privatize! Outsource mortgage origination to criminals!

Maybe these words weren't ever uttered in that exact order, but in view of the facts disclosed by The Miami Herald on rampant fraud and corruption in the mortgage industry, one can easily attribute to the embrace of felons the same light-bulb-in-the-head going off as the British who decided to use reprobates and criminals to colonize Australia.

2003, in Florida, was the high water mark for Florida housing boom, whose key values were embedded in the conviction that regulation was the enemy of progress. That same year Jeb! and W financier, Al Hoffman-- whose former company WCI Communities is now a shell of its former self-- crowed to The Washington Post that suburban sprawl was "an unstoppable force."

Today's Herald report highlights that Saxton made overtures to House Representative Scott Randolph, to strengthen regulation of mortgage originators. That's the biggest laugh line in the report.

"If they were trying to stir some urgency or interest, I probably wouldn't have been the one" to talk with, Randolph told the Herald. Randolph, you see, is the only card-carrying liberal in the entire Florida House of Representatives.

Imagine a hard-bitten civil servant, whose rise to power and influence was based on his ability to skirt regulation wherever its ugly head might rear up, going to a liberal with a bright idea for regulation. (Scott Randolph actually believes that state policy of Florida to drill holes to flush our poop down into drinking water aquifers is a bad idea!)

During the Bush years, when the housing bubble foamed to a fine froth, ex-convicts were denied the right to vote in Florida elections but allowed to play in the fields of the mortgage industry. Now there's a set of conservative values.

Whatever you call it, today the state's chief financial officer, Alex Sink, and current governor, Charlie Crist, are being forced by circumstance to reach in the dark down into the grab bag from the worst financial crisis since the Great Depression in Florida. Everything they touch feels a little squishy, a little sticky, and smells really, really badly. Only a few years ago they used to polish that stuff in Florida and put it on awards.

Now you can laugh.