The “team of rivals” metaphor has been overused lately as the news networks try to dumb down to the unwashed multitudes the reason behind the rapprochement between President-elect Obama and Sen. Hillary Clinton, his erstwhile antagonist and now likely (as of this writing) Secretary of State.
The networks sought to use the title of a book by Doris Kearns Goodwin to explain that President-elect Obama will likely appoint Mrs. Clinton because he needs an experienced hand to deal with time-consuming foreign policy issues as he wrestles with an economy that has gone bad in a hurry.
It’s very simple, really.
Therefore, it is very refreshing that Sheila Bair, the chairman of the Federal Deposit Insurance Corporation, put herself on the line recently to explain to directors of the American Insurance Association that the term has other meanings, and that it is critical the insurance industry understands one of them as it seeks to find a niche in the brave new world of federal regulation.
Ms. Bair is a decent person, and an effective, experienced and flexible administrator who has been forced to deal with economic turbulence thought to have been put to rest by government actions of more than 70 years ago.
Effectively, Ms. Bair said the industry’s well-laid and thought-out plans to create its own agency to regulate it at the federal level, known generically as the optional federal charter, may be another victim of the economic tsunami that has sent the economy reeling and official Washington floundering as it tries various policy options to deal with the continuing meltdown.
The reasons, as she explained to the board of the AIA on Nov. 14, are several-fold.
First, all the federal banking regulators, as well as the Treasury Department, are busy dealing with their own problems, led by the fact that short-sellers are taking advantage of the frozen credit markets and the various toxic assets held by financial institutions to mark the prices of these firms down to unprecedented levels.
Added to this mix is the fact that these regulators are normally a team of rivals, seeking to add to the institutions they oversee, and constantly pointing out the inadequacies and failures of their erstwhile colleagues.
“The last thing the federal regulators need is to be distracted by turf fights among the four current federal regulators,” Ms. Bair explained.
Moreover, she continued, “Re-regulation will favor fewer regulators at the federal level, rather than more, and it will be done in phases. All current federal regulators have their hands full with the various bailout and stimulus packages that Congress has passed.”