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Stop the Financial Services "Super Czar" (Updated)

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May God bless and keep the Czar...far away from us!

-Fiddler on the Roof

There has been talk about appointing a new "systemic risk regulator."

This "Super Czar" would oversee all of the financial services industry.

We had a "Super Czar" last year. His name was Treasury Secretary Henry Paulsen.

"Hank" Paulsen came to Congress with a two page proposal. He asked for $700 billion in bailout money and unlimited power to spend it any way he pleased.

If that is how a Czar acts, I don't want another one.

After some hearings and two votes, Congress gave him what he asked for.

Now we are spending billions to clean up mistakes that "Hank" made. AIG is one of them.

We don't need a super regulator. We don't need a super anything.

I don't agree with FDIC Chief Shelia Bair, who is strongly promoting the super regulator concept, but she said something that I wholeheartedly buy into: We need companies that are not "too big to fail."

I don't want an unelected bureaucrat to have nearly as much power as the President of the United States.

I can vote a President out of office. I can't get rid of a federal bureaucrat that easily.

If someone is going to control my financial future, I want to be able to hire and fire them.

Our founding fathers set up a system where Congress and the President of the United States were in charge.

I've read the constitution many times and I've never seen any mention of systemic risk regulators or "Super Czars."

If you read the Declaration of Independence, you can see that the founding fathers did not like the concept of government without representation.

I don't like it either.

For many years, we had a system that worked. Banks did banking, insurance companies sold insurance and brokerage houses handled stocks and bonds

Then everyone got greedy. They all got into each other's businesses.

I can't find one example of a company that did it well.

If you look at the Wall Street companies going broke, most did well in their core businesses. When they got into unchartered waters, they screwed up.

AIG is a classic example. Its insurance companies are regulated by state insurance commissioners. AIG's insurance companies are sound and maintain high ratings. The state commissioners keep a close eye on them.

AIG insurance companies were part of a larger company with a "financial products" division. The financial products division was unregulated, lost billions of dollars, needed a couple of taxpayer bailouts, and its executives are now trying to collect $165 million in "performance bonuses."

For several decades, AIG would have been prohibited from forming a "financial products" division. It didn't happen until 1999.

No financial products division, no AIG bailout. No billions of taxpayer dollars down the drain.

There was a second chance to fix things.

When AIG came to Washtington looking for a bailout last year, the simplest solution would have been to let the financial products division fail and let the AIG insurance companies go on.

If the financial products division had gone down, they wouldn't be taking a $165 million bonus. We also would have saved billions in bailout money.

Our "Super Czar" Hank Paulsen, let them stay in business.

I have not had a lot of faith in how Washington has handled itself. There has been a trend for two decades for "bigger and better." That is how we wound up with companies that considered "too big to fail"

The AIG bonuses has been a landmark for the American people making Washington do something they didn't want to do . A lot of officials in Washington and on Wall Street would have been happy to let the bonuses be paid quietly. The current Treasury Secretary was for the idea.

The public is mad and starting to pay attention. . The voice of the average American is being heard by its elected officials.

I doubt that voice would get the same attention from an unelected "Super Czar."

Our founding fathers built the country on the idea of representative government.

Before Washington creates another layer of bureaucracy between itself and the American people, our leaders might want to go back and read the documents that created our country.

Don McNay, CLU, ChFC, MSFS, CSSC is the founder of McNay Settlement Group in Richmond, Kentucky. He is the author of Son of a Son of a Gambler: Winners, Losers and What to Do When You When The Lottery. You can write to Don at don@donmcnay.com or read his award winning, syndicated column at www.donmcnay.com. McNay is Treasurer for the National Society of Newspaper Columnists and a lifetime member of the Million Dollar Round Table.