February 15, 2013
Elizabeth Warren Style Oversight
Posted by David Zaring

I enjoy having my former secured transactions professor in the Senate, but I've never quite understood the appeal of bringing in agency heads and yelling at them, long though that legislative tradition is.  Here's what Elizabeth Warren asked a smattering of financial regulators in her first oversight hearing, along with their answers:

Q: “If they can break the law and drag in billions in profits and then turn around and settle paying out of those profits, then they don’t have much incentive to follow the law,....The question I really want to ask is about how tough you are.”

[ED: If I was a regulator I'd be tempted to respond with a "super-duper-tough" here.]

Q: “Anyone?” 

Thomas Curry, OCC: “We do not have to bring people to trial ... to achieve our supervisory goals.”

Elise Walter, SEC: “We truly believe that we have a very vigorous enforcement program,”

Q: “Can you identify the last time you took the Wall Street banks to trial?”

Walter: ...“get back to you with the specific information,” ... “we do litigate.”

I'm not sure asking someone how tough they are is a question really looking for an answer.  Yes, there's a point of view here - Warren wants the agencies to file more cases against bankers.  And OCC even provided some information: sounds like they will not be filing more cases.  But Anne O'Connell has a paper that suggests that the more oversight hearings, the shorter the tenure of agency officials (or so I recall, it's unpublished, though referred to in note 23 of this).  This sort of thing seems to me to be a bit too offten like unpleasant kabuki theater.

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