Will FHLB Atlanta’s Failure Spark a Major Regulatory Overhaul?

Over a year ago, Chuck Schumer said (and I agreed) that the Federal Home Loan Bank of Atlanta was an all-but-unregulated nightmare of enormous proportions. Now, HousingWire’s Paul Jackson tweets a rumor that FHLB Atlanta is going to be taken over by its regulator — the same ineffectual Federal Housing Finance Board which has been so useless and complacent until now.

This has all the makings of a major fiasco — one which, if Barack Obama plays it right, could finally push Congress to conduct the soup-to-nuts regulatory overhaul which is long overdue. If, by this time next year, the FHFB, and the OTS and the OCC and the FHFA and the FDIC and the NCUA, not to mention the CFTC and the SEC and the state insurance commissioners and Uncle Tom Cobbley and all, are things of the past, then maybe some good will have come of this. But all that turf is jealously guarded, so I’m not holding my breath. Obama wants to change Washington, but Washington, by its nature, hates to be changed.

Update: It turns out that the FHFB, like OFHEO, was transmogrified into the FHFA. Are you reassured now?

Update 2: Paul Jackson now tweets that the rumor was false. In specifics, maybe, but FHLB Atlanta is surely overdue for being taken over.