Today, Paulson announced how the CPP will work, as far as the remaining $125 billion devoted to it (the first half of the program went to those nine big banks, if you recall) goes.  The problem here is that there is a lot of taxpayer money to dole out, and time is of the essence, but there's a lot of banking regulators in the country.  Four, to be precise, at the federal level: The Fed, the FDIC, the OCC, and the OTS.  Paulson is probably thinking that if we'd gotten around to enacting his blueprint, we wouldn't need the following process for capital purchases:

There is now a single application form that qualified and interested publicly-held financial institutions will use to submit to their primary regulator – the Federal Reserve, the FDIC, the OCC or the OTS. ...[T]o apply for the capital program, banks should ... consult with their primary federal regulator. After this consultation, institutions should submit an application to that same primary federal regulator ... all regulators will use a standardized process to review all applications to ensure consistency.

...[O]nce a regulator has reviewed an application, it will send the application along with its recommendation to the Office of Financial Stability at the Treasury Department.

Once Treasury receives the application with the regulator's recommendation, we will review it and decide whether or not to make the capital purchase.

It's not new to say that the regulatory redundancy is ridiculous (it is strange, no question).  One reason you might want such redundancy would be if you believe in regulatory competition, another, best exemplified by the FDIC, would be that you might want various sets of eyes on the case of the safety and soundness of financial institutions.  There's little doubt, however, that this second justification is quite inconsistent with fast regulatory action.

Also note how the TARP is being jammed into the existing regulatory structure.  Treasury has to consult with the supervisors in spending TARP money, but it doesn't need to make them the first review of applications for government largesse - or promise to give that review "great weight."  It did both of those things today - perhaps they're too exhausted over at Treasury's Office of Financial Stability not to start spreading some of the regulatory wealth.

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