I’m spending part of my holiday weekend learning about a guy named John Dugan. This guy is apparently one of the most influential architects of the banking disaster we’re suffering through. His long career has been devoted to deregulating the financial industry. We know the results of this deregulation — economic collapse and massive bailouts at taxpayer expense.
Dugan hasn’t changed his tune. He’s still fighting regulation of the big banks, and he’s still occupying an influential government post, Comptroller of the Currency. In the Obama administration. Obama apparently has the power to get rid of him, but the President has chosen to keep this guy on. Why?
Of all the architects of last year’s financial crash, John Dugan remains the most obscure, despite his stature as one of the most influential. [...] When the financial system finally succumbed to its own excesses in September 2008, Dugan’s fingerprints were all over the economic wreckage, but almost nobody noticed. [...] Dugan’s term expires in August 2010, when President Obama can reappoint him or nominate someone else. But given Dugan’s record, it’s hard to see why he has been allowed to stay on the job for Obama’s first year.
At just about every turn, the OCC has ruled in favor of radical deregulation, and against consumers. Why the Obama administration has retained Dugan (he’s been at the OCC since 2005) is beyond my comprehension. He is a classic Bush appointee — a regulator who is against regulating — who should have been dismissed at the earliest opportunity.
The Federal Deposit Insurance Corp. delayed a proposal Tuesday to place new restrictions on securitizations after board members disagreed about its impact. The initial plan’s goal was to crack down on institutions that did not properly underwrite mortgages and other assets before selling them into the secondary market. The FDIC wanted to ensure these institutions jumped through a variety of hoops to earn the “safe harbor” accorded to securitized assets in a failure.
But two board members said the plan … could harm the securitization market. They convinced the FDIC to release a broad advance notice of proposed rulemaking that merely asks for comment on the best way to proceed.
“This approach will stimulate robust comment on this issue now, but in a way that will minimize unintended consequences,” said Comptroller of the Currency John Dugan.
John Dugan is concerned about unintended consequences. That’s good to know. Now that health care reform is wrapping up, we’ll start to hear more about financial industry reform. We’ll see what Dugan says about that, and we’ll see if the Obama administration listens to him.