The Wall Street Journal‘s Damian Paletta reports that the Obama administration will not, as some had conjectured, consolidate the government’s many different financial regulatory agencies into one, larger superagency that would ride herd over the financial institutions and products that helped create the global financial crisis. Paletta writes that
the decision is partly practical and partly political. Key administration officials believe they can achieve many of their overarching goals by overhauling rules . . . [and] officials worry that trying to start from scratch could ignite messy turf battles that might slow or even derail the entire process.
Stopping the move toward a super-regulator has been recommended by observers like Richard Neiman, a bank regulator for New York State and a member of the TARP oversight panel set up by Congress. Neiman makes the convincing point that state-level regulation would be hobbled or ignored by a massive national agency, and that state regulators are usually quicker to spot local violations.
Max Stier, director of the Partnership for Public Service, points out in the Washington Post the unfavorable examples of corporate mergers (which usually don’t work) and the Department of Homeland Security, which has had a very rocky evolution since its creation after the 9/11 terrorist attacks.
If you want to consolidate agencies, Stier notes, you also have to consolidate congressional oversight (and that means some legislators losing their oversight responsibilities, committee and subcommittee chairmanships, etc.). DHS, for example, "falls under the jurisdiction of 86 committees and subcommittees [which] illustrates how agencies are set up for failure if a reasonable oversight structure is not built in."
But perhaps his most important recommendation is that the Obama administration should focus less on restructuring and more on
preparing its political appointees to effectively lead federal agencies. Energized, well-trained leaders have much more potential to turn around a failing agency than a major reshuffling does.
This kind of step is hard to sell, because it doesn’t look like "action." It’s also hard to measure whether it’s working, and so is not likely to be encouraged by legislators who want to boast about their involvement in concrete solutions.
But it recognizes that people are at the heart of government. So will the decision not to create a super-regulator be presented in a constructive light, and used by President Obama — or others in his administration — to explain his approach to governing? I’m still waiting for Cabinet secretaries and other government officials to get out of the wings and onto the stage for this administration. -NH
Topics:
Dept. of the Treasury,
Free Agency,
Government in My Backyard (GIMBY),
Securities & Exchange Commission,
State and Local Government
Tags:
Commodity Futures Trading Commission,
Dept. of the Treasury,
Max Stier,
regulation,
Richard Neiman,
SEC,
Securities and Exchange Commission