Local Politics

Tuesday, Sep 07 2010 07:09 PM

Federal commission hears Bakersfield's woes

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    By Felix Adamo / The Californian

    Former Bakersfield Congressman Bill Thomas, now vice chairman of the Financial Crisis Inquiry Commission, asks for input from local bankers on the financial crisis during a hearing titled "The Impact of the Financial Crisis — Greater Bakersfield."

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    By Felix Adamo / The Californian

    Financial Crisis Inquiry Commission Chairman Phil Angelides was one of four commissioners in Bakersfield for the field hearing "The Impact of the Financial Crisis - Greater Bakersfield."

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    By Felix Adamo / The Californian

    Local banker D. Linn Wiley (right), vice chairman CVB Financial Corporation and Citizens Business Bank, addresses the Financial Crisis Inquiry Commission on the hearing "The Impact of the Financial Crisis - Greater Bakersfield." Arnold Cattani (left), chairman of Mission Bank, and Steve Renock (center), president and CEO of Kern Schools Federal Credit Union, also answered questions from the commission.

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BY GRETCHEN WENNER, Californian staff writer gwenner@bakersfield.com

A few words from Bill Thomas offered a ray of hope -- for one woman -- at the end of Tuesday's field hearing of the federal Financial Crisis Inquiry Commission in Bakersfield.

Otherwise, local attempts to modify home loans are failing in droves, testimony indicated, and the housing market is still reeling since the bubble burst.

Marie Vasile told commissioners about her family's difficulties attempting a short sale of their home even though a neighbor is waiting to buy it. Red tape and administrative bungles have pushed Vasile and her husband, who suffered a debilitating inner ear problem, to the brink of foreclosure, even though they've never missed a home, credit card, student loan or other payment (until they had to skip a few house payments this summer so the short sale could move forward).

Thomas, Bakersfield's retired Republican congressman who is vice chair of the commission -- a powerful man known for his intelligence, quick wit and sometimes sharp tongue -- asked Vasile several times to name the lender she was dealing with.

"Wells Fargo is managing the loan for Fannie Mae," she told him.

"I think maybe we'll get a response," Thomas told her, as a few knowing chuckles were heard among attendees.

Bakersfield was the first of four "main street" cities to host a field hearing for the commission, which was created by Congress in 2009 to determine what caused the financial meltdown. Commissioners will also visit Las Vegas, Miami and Sacramento this month.

Just four of 10 commissioners made it to Bakersfield: Thomas, who acted as chair for the hometown session; Chairman Phil Angelides, Brooksley Born and Heather Murren.

Most of Tuesday's session involved testimony from sworn panels of local bankers and real estate professionals.

One striking bit of information came from a panel discussing foreclosures and loan modifications. Murren, a commissioner, asked if the panelists were aware of any successful loan modifications.

Brenda Amble, escrow manager at Ticor Title Co., knew of only one.

Jeannie McDermott, who has profusely documented her own as-yet-unsuccessful modification attempt, didn't know of any, and neither did short-sale specialist Laurie McCarty of Coldwell Banker Preferred.

Local appraiser Gary Crabtree provided dense market statistics that commissioners said were especially helpful.

Mission Bank's chairman, Arnold Cattani -- a Harvard Business School graduate -- showed up in jeans and offered no-frills comments that seemed to engage commissioners.

When asked about mortgage fraud in the local market, Cattani said what was going on here was "pure lunacy."

"I think the lunacy created the fraud," he told them, adding: "The system was screwed up."

The local market was being driven by "extreme speculation," Cattani said. Bakersfield had lots of raw, cheap land and builders could get approvals here quickly.

And, he said, "foolish banks (gave) builders the money to do it."

Bakersfield's failed San Joaquin Bank was obliquely referred to several times -- never by name -- though the cause of its failure was not discussed in depth, nor were resulting losses to the bank's local investors. Similarly, the collapsed Crisp & Cole Real Estate company had a significant but unnamed presence.

The hearing, held in county supervisors' chambers, attracted a small audience that had dwindled to about 30 when the session ended shortly before 3:30 p.m.

Murren said afterward the information and testimony had been helpful and there was "really no substitute for getting out into the field." The commission's previous hearings have been held in New York and Washington, D.C.

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