Saturday, June 27, 2009
Keeping Regulators Honest?
"The nation is about to make two momentous policy choices about the future of our financial system. One will be made by the president, the other by the Supreme Court. Both decisions involve the proper roles for state and federal regulatory autjority, and both have far-reaching consequences. Yet the country seems barely aware of the issues, or the stakes involved. ... The Obama administration will shortly announce its own restructuring plan. It should take a fresh approach by including a significant role for the states. This is necessary to maintain checks and balances and protect consumers from predatory lending and other abusive practices. ... State supervision also fosters thousands of community and regional banks that provide diversity and stability to our financial system. ... A single federal regulator would tend to focus on the largest institutions to the detriment of smaller ones. ... The second big issue involves the ability of states to enforce valid laws already on their books", Richard Neiman (RN) at the WSJ, 5 June 2009, link: http://online.wsj.com/article/SB124416180649887399.html.
RN, New York bank superintendent ignores the most important reason to have multiple bank regulators: the more regulators you have, the more difficult it is to capture all of them.