Wanted: New Bank Regulator, Pointy Ears
Exciting news this week for policy Trekkies: If Obama gets his way, we could have a single federal bank regulator. Boo hoo -- no more Office of Thrift Supervision, no more Office of the Comptroller of the Currency. (The Federal Reserve and FDIC would stay, because they have “actual responsibilities,” but they’d no longer supervise banks.)
In a report issued on Tuesday, the esteemed Committee on Capital Markets Regulation made a similar suggestion, except they want to throw the SEC and CFTC in too, making one big happy financial regulator. (More on these guys soon. And I do mean guys; the Committee has 25 members and only one is female.)
It took Barney Frank about five seconds to burst the bubble: (“The suggestion that we’re going to get to a unilateral bank regulator, something equivalent to the [UK] Financial Services Authority, is simply wrong”). This perhaps emboldened the head of the American Bankers Association to call regulatory consolidation a "non-starter."
At one time, agency mergers seemed to me like a no-brainer. It’s nutty for institutions in the same industry to be regulated by different agencies making different rules.
But now regulatory restructuring just seems like form over substance – or form over politics. Sure, a single regulator makes sense on paper, but given the level of “regulatory capture” lobbyists have achieved in recent years, you have to wonder if it's wise to give them fewer regulators to capture. (Obama's plan, I should note, keeps state bank regulators in place.)
What really matters is whether the folks living inside the boxes on the organizational chart are nonpartisan, somber and competent. So if you tell me your big new spiffy omnipotent agency will be headed by Mr. Spock, or, failing that, FDIC Chair Sheila Bair (check out this long Bloomberg story about Bair today), these mergers sound like a jolly good idea. On the other hand, if you tell me you’re giving the job to Comptroller of the Currency John Dugan (subject of a scathing Steven Pearlstein column this week), then, uh, not so much.
It's too long for a T-shirt, but here's TBDO's new motto:
Agencies don’t kill financial regulation; political appointees do.
image credit: buddytv.com
In a report issued on Tuesday, the esteemed Committee on Capital Markets Regulation made a similar suggestion, except they want to throw the SEC and CFTC in too, making one big happy financial regulator. (More on these guys soon. And I do mean guys; the Committee has 25 members and only one is female.)
It took Barney Frank about five seconds to burst the bubble: (“The suggestion that we’re going to get to a unilateral bank regulator, something equivalent to the [UK] Financial Services Authority, is simply wrong”). This perhaps emboldened the head of the American Bankers Association to call regulatory consolidation a "non-starter."
At one time, agency mergers seemed to me like a no-brainer. It’s nutty for institutions in the same industry to be regulated by different agencies making different rules.
But now regulatory restructuring just seems like form over substance – or form over politics. Sure, a single regulator makes sense on paper, but given the level of “regulatory capture” lobbyists have achieved in recent years, you have to wonder if it's wise to give them fewer regulators to capture. (Obama's plan, I should note, keeps state bank regulators in place.)
What really matters is whether the folks living inside the boxes on the organizational chart are nonpartisan, somber and competent. So if you tell me your big new spiffy omnipotent agency will be headed by Mr. Spock, or, failing that, FDIC Chair Sheila Bair (check out this long Bloomberg story about Bair today), these mergers sound like a jolly good idea. On the other hand, if you tell me you’re giving the job to Comptroller of the Currency John Dugan (subject of a scathing Steven Pearlstein column this week), then, uh, not so much.
It's too long for a T-shirt, but here's TBDO's new motto:
Agencies don’t kill financial regulation; political appointees do.
image credit: buddytv.com
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