Regulators not in step with Obama plan
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KAI RYSSDAL: The president’s plan to overhaul financial regulations has been grinding its way through Congress for a couple of months now. The process hasn’t always been as neat and tidy as we learned back in civics class in high school.
The pattern didn’t change today. The heads of the four big financial regulators offered their input to the House Financial Services Committee. What lawmakers saw was a good old-fashioned power struggle.
Marketplace’s John Dimsdale reports from Washington.
John Dimsdale: The White House is proposing to give the Federal Reserve Board new authority to watch out for risks to the entire financial system. That’s designed to fix the flaw where no one regulator had a comprehensive picture of the threats to the entire economy. Fed Chairman Ben Bernanke is fine with that.
Ben Bernanke: When it comes to specific regulatory actions or supervisory judgments, collective decision-making can mean nobody owns the decision and the lines of responsibility and accountability are blurred.
But sitting next to Bernanke, the chairman of the FDIC, Sheila Bair, said it would be better to have a group of regulators, meeting together, to keep an eye on the entire system. She’s also against another White House proposal, transferring the oversight of bank products, now handled largely by the FDIC, to a new Consumer Financial Product Safety Commission.
Sheila Bair: I’m very concerned about taking examination and enforcement responsibility away from bank regulators. It would disrupt consumer protection oversight of banks and it would fail to adequately address the current lack of non-bank supervision.
An anticipated debate over regulatory turf was cut short by a long set of floor votes, prompting the chairman to gavel the hearing to an early close. But before it was over, Treasury Secretary Timothy Geithner was asked what he thought about the second-guessing.
Timothy Geithner: With great respect to the chairman and the other supervisors who are reluctant to do this, they are just doing what they should. They would just defend the traditional prerogatives of their agencies.
And it’s through that prism, Geithner says, that lawmakers should consider the regulators’ objections to change.
In Washington, I’m John Dimsdale for Marketplace.
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