Schumer pokes Countrywide

Actually, shoves is more like it. The New York senator told the Calabasas mortgage lender today to stop paying brokers higher commissions for steering borrowers to adjustable rate subprime loans - a practice that was outlined in a NYT story over the weekend. Schumer, who is chairman of the Senate Housing Subcommittee, has been laying into the mortgage biz - as well as Wall Street - for causing the current debt crisis. "Until we deal with the depth and seriousness of the problems in the mortgage market, we will not ease the crisis of confidence in the broader credit markets," Schumer told Fed Chairman Ben Bernanke. He won't get much argument that some adjustments need to be made, but it's the "until we deal..." part that has some folks squirming. As an example of overstepping, he called on the Big Four accounting firms to "urge your clients to do their part to keep our housing markets afloat, by modifying subprime loans that are at risk of default" - a notion Bloomberg columnist Jonathan Weil said was just plain nutty.

You see, management's job is to manage, and the auditor's job is to audit. There's also the decades-old requirement under U.S. securities laws that accounting firms must be independent of the companies they audit, both in appearance and in fact. Under the Securities and Exchange Commission's rules, that means the auditors, among other things, "must act in an unbiased and objective manner." Lobbying audit clients to change their business practices is the mark of a biased auditor, not a disinterested one.