One Man’s View Of Regulators

I’m not a big fan of Richard Shelby. Nevertheless his remarks to Tim Geithner today deserve notice.

“Another thing that the TARP has accomplished is covering up the egregious failures of our banking regulators over the past decade,” Sen. Shelby said at the hearing, where Mr. Geithner was the only witness. “TARP funds have saved financial institutions whose failures would have cast a bright light on many of our banking regulators. This should come as no surprise as many of those banking regulators are now running TARP programs, including Secretary Geithner himself. As president of the New York Fed, Secretary Geithner was the chief regulator of many of the financial institutions with the most serious problems, including Citigroup.” 

“Unfortunately, the Treasury also appears to be using the TARP to advance its regulatory reform agenda by placing Secretary Geithner’s prior employer, the Federal Reserve, at the apex of our financial regulatory regime. I would point out to the Treasury secretary that there are serious unexamined questions regarding the Fed’s failure to fulfill its preexisting regulatory responsibilities.  With that in mind, I will view with great skepticism any move to give the Fed expanded authority.”

Those are tough words and to an extent he’s benefiting from hindsight. At the same time a good part of the blogosphere calls for the heads of a number of financial institutions while turning a blind eye to the abject failure of our regulatory regime.

It’s worth keeping Shelby’s remarks in mind as we welcome a new regulatory structure that will surely provide less than its advocates advertise.

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