Editorial: Adding insult to injury

Wednesday, Sept. 12, 2007 | 7:36 a.m.

As the housing market continues to sputter and subprime mortgages are threatening to financially sink millions of Americans, Gov. Jim Gibbons' administration continues to defend its appointment of a former executive of a bankrupt subprime lender to regulate Nevada's mortgage industry.

The appointment of Joe Waltuch, former senior counsel and vice president for regulatory and government affairs of New Century Financial Corp., was insulting to Nevadans, especially as Waltuch defends the industry and downplays the foreclosure crisis.

"You're missing the positive side of all this," Waltuch told J. Patrick Coolican in Sunday's Las Vegas Sun. "We put a lot of people in homes who wouldn't otherwise be in homes."

And now millions of those people are in jeopardy of losing their homes because companies such as New Century, which is under federal investigation, funded loans that were well above what most people could afford. Subprime loans, which offered teaser interest rates that balloon after a couple of years, have fueled the rash of foreclosures and the slumping real estate market.

Nevada continues to have the highest rate of home foreclosures in the nation, more than 3 1/2 times the national average. RealtyTrac, a real estate research firm, recently noted that defaults are rising in Nevada "especially among homeowners with subprime mortgages."

Economists and other experts say the crisis will make waves throughout the economy and could have been prevented with stronger regulations. But don't expect that in Nevada with Waltuch in command.

Although state officials try to portray him as a bit player at New Century, Waltuch worked for a company that became infamous for its aggressive push against regulation and industry standards. He sounds like a company spokesman, indicating support for deregulation and arguing that government regulation of the mortgage industry "is more than sufficient."

Waltuch's former employer, however, proves otherwise, and yet the Gibbons administration shamefully thinks Waltuch's appointment is appropriate. Nevada needs a true regulator, not a subprime cheerleader, to restore consumer confidence.