Sheila Bair's NYT: FDIC Chief's Case Against A Super-Regulator

nytimes.com:

The Obama administration has proposed sweeping changes to our financial regulatory system. I am an active supporter of the key pillars of reform, including the creation of a consumer financial protection agency and the administration's plan to consolidate the supervision of federally chartered financial institutions in a new national bank supervisor. This consolidation would improve the efficiency of federally chartered institutions while not undercutting our dual system of state and federally chartered banks.

Read the whole story: nytimes.com

Comments

[ntmessage]

Turf war and nothing else. We must have a super regulator, and across all financial instruments and international markets. The argument FOR a super regulator is that segments of the financial system cannot play one against the other or seperate their business across regulators so that can get away with something.

[DiogenesOfAlaska]

I agree. One of the key lessons - and of the key points in the Treasury White paper from June - is that the financial services industry must be regulated according to the substance of the business they are doing, as resulting from their balance sheets (and off balance sheet activities), not according to what they call themselves.

While there may be a point in Bair's article to the effect that small local banks shouldn't be treated the same way as large Wall Street firms - which is kind of obvious - this does not provide good reasons to maintain the current regulatory infrastructure. It may be an argument towards the details in the way the super-regulator works on site, but that's about it.

[spinns17]

wonder why http://video.google.com/videoplay?docid=7065205277695921912

[DiogenesOfAlaska]

Let's assume it is credible that 'this is not about protecting turf'.

But why does a single regulator help large banks and work against small ones? If that's true on balance, then there may be a point. But why would this be so?

And why is it good to have a regulatory structure which manages to procrastinate the Basel II regime not merely for 15 years - as everyhwere else, but instead for 18 years?

It may very well be true that there are flaws in Basel II and the capital requirements for many banks would have dropped even further in the US if it had been adopted.

However, it seems very strange to praise a regulatory structure for being even slower than the Bank for International settlements or the Basel committee, when it comes to passing meaningful reform. It's not as if the US system had anything in place to make sure crises don't happen.

[TJCole]

I agree with Shelia Bair as the agency she is speaking of is the federal Reserve overseeing our corrupt banking system she is 100% in favor of the Consumer protection agency plan.....

She is one of the few humane good guys in all this her and Peter Orszag...the rest are greedy corrupted banksters...like Geithner and Bernanke and Summers and Rubin..who set up the entire scam for Obama...!

Can't you just feel the change...

[iblogleft]

Let me translate this a bit:

"We must not allow a single, transparent organization of citizens to undermine our ability to game the banking system. The ability to separate and conquer regulators that are not favorable to the elite money managers is paramount to a successful business model. To limit the bankers ability to control rating agencies, accounting firms and appraisers would be extremely detrimental to the status quo."