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The Wall Street Journal reported today, and Reuters confirmed, that Secretary Geither called in the heads of the FRB, the SEC, the CFTC and the FDIC (among others) on Friday to lay down the law in no uncertain terms on their mandated public support for the Obama Administration’s reform plans and to demand they stop the “sniping” that has been going in turf wars among the agencies.
In the video clip above (which will include a brief commercial from the Journal), the WSJ’s reporter Deborah Solomon cites growing unease at senior levels with the slow pace in Congress, the pushback from the industry as well as the divisions among the ranks of regulators as sources of the high level of frustration that led to the reportedly tough, expletive-filled meeting atmosphere.
Despite the strong language in the meeting last Friday, at least some of the regulators remain quite independent as far as expressing their views. In particular, the heads of the OCC and the OTS, which would be consolidated under the Administration’s current proposal, voiced their disagreement. In his testimony before the Senate Banking Committee on August 4th (shown in the clip at right), John Dugan, the Comptroller of the Currency, voices support for many elements of the Administration’s proposals but disagrees forcefully with some key elements, including proposals to give the FRB authority to override his agency’s standards and enforcement in some circumstances, and to consolidate enforcement of consumer provisions in the proposed CFPA, thereby divorcing consumer and prudential regulation. John Bowman, acting head of the OTS, disagreed with the premises for consolidating his organization noting that the actual distribution of failures did not support the regulator-shopping accusations on which the proposal was based.
In response to a question from Senator Shelby citing the WSJ article, each regulator specifically stated that they all were giving their own, independent views, as is required by the terms of their charters.
Nevertheless, in an interview with the Wall Street Journal on August 13th, Secretary Geithner remained confident that the Administrations program was on track. As the Journal summarized the situation:
The administration’s plan has lost some momentum since it was unveiled in June, with lawmakers postponing votes on key portions of the proposal, the industry criticizing much of it and regulators battling over turf. But Mr. Geithner said the effort is “doing fine” and predicted the administration will get most of what it is seeking when Congress returns in September.
One certainly would expect the meetings at Treasury to remain interesting at least until the disposition of the proposed legislation becomes clearer.
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