President Barack Obama
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Dear President Obama,
I sure hope all’s well in Washington. It’s so damn hot here in Phoenix! I’d turn my AC down if I could afford it – maybe once you approve some bigger solar energy grants? (J/K!!)
You know I dig you. I excitedly voted for you, and I can’t even fit into the first Obama shirt I bought after your speech at the Democratic National Convention almost exactly five years ago today. I have no political axe to grind with you, sir. I do, however, have a few things to say about your banking regulatory reform ideas.
As I read through your report, Financial Regulatory Reform: A New Foundation, I noticed five key tenets to your plan:
I want to focus on #1 and #3 above.
Promote robust supervision and regulation of financial firms
First, let’s agree that there is a massive consignment of blame to share for the financial mess we’re in now – banks, consumers and, yes, regulators. So, no argument from me about the need for reform.
Part of your proposal is to create a formal committee made up primarily of the head regulators to coordinate supervision of the big, risky institutions.
However, once the time is right to shuffle the regulatory deck, you may as well really shuffle it. Right now, you are asking for slightly more power for the Fed (the new super-regulator) and FDIC (the new standard-setter for regulators), no change in the NCUA, and in effect a merging of the OCC and the OTS into a new agency called the National Bank Supervisor (NBS).
For a politician promising sweeping change, your proposed regulator restructuring is window dressing, to put it kindly. If you want to really streamline, you should consider consolidating the FDIC, OCC, NCUA and OTS. With the thrift charter on the table to be whacked and the NCUA bumbling its way (at best) through this crisis, why not consolidate all of the bank police into one agency? Now that would be sweeping. That would be a big step toward efficiency and accountable government.
Protect consumers and investors from financial abuse
Your desire to establish financial consumer protection is admirable, but your plan to make that happen is the most troubling part of your reform plan. You want to create yet another agency, called the Consumer Financial Protection Agency (CFPA), to oversee financial products and services – especially mortgages – similar to the FDA’s oversight of prescription drugs or the Consumer Product Safety Commission’s oversight of appliances.
Yikes! This is downright Goresque. Remember when your critics said you would be nothing but a policy wonk who talks a great game, assembles think tanks, and doesn’t get much done? This is exactly what they meant.
I realize that listening to us bankers complain about heavy regulation is a bit like listening to teachers complain about low salaries. Both groups are right, but heavy regulation isn’t exactly a new issue in the banking world, just like low salaries really shouldn’t surprise anyone who takes up teaching. So I get it if you are a little deaf to our complaints about too many laws and regulations.
I also understand that some consumers really were screwed over by financial service companies – credit card companies, mortgage lenders and yes, a few banks. That said, a new agency to oversee consumer protection is serious overkill. Here is a much better way to address the problem:
I am 100% in agreement that the consumer does need some protection from the few dishonorable elements in the financial industry. But I promise you, the last thing we need is yet another supervisory agency in the mix. Give your existing agencies some tools to get the job done, and it will happen. Streamline, baby, streamline.
Mr. President, I thank you for your attention.
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