New Treasury Bureau to Raid Other Agencies for Employees
Treasury Department officials have an idea about where they can get at least some of the employees to staff the new Bureau of Consumer Financial Protection: by transferring them from other federal agencies.
The Wall Street Journal reports that Treasury Secretary Timothy Geithner has drafted a memo to employees at seven financial regulatory agencies informing them they could be asked to move to the new bureau, which was created by financial regulatory overhaul legislation recently signed by President Obama.
"Certain employees at your agency that work on consumer protection may be asked to transfer," the draft reads. "The process will involve extensive consultation between Treasury and your agency before any decisions about transfer are made."
The Journal reports that it's unclear exactly how many employees would be affected. Overall, the Bureau of Consumer Financial Protection is expected to have hundreds of employees and a budget of around $500 million.
The seven agencies that could be asked to transfer employees to the new bureau are: the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Federal Trade Commission, Department of Housing and Urban Development, National Credit Union Administration, and Office of Thrift Supervision.
Authority over consumer financial product regulation is expected to be transferred to the new agency within a year.
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Government Executive Editor in Chief Tom Shoop, along with other editors and staff correspondents, take a fresh look at news affecting the management and operations of the federal bureaucracy.
This sounds like more of the same revolving door, conflicted ethics approach to regulating the financial sector.
I have seen all too often bringing in costly Wall Street law firms and financial consultants to perform routine financial transactions that civil servants could perform just as skillfully.
I'm going to pose a very basic question: Do agencies that regulate financial services institutions really need to hire people who understand securities, banking, commodities, and so on?
The answer is "no." You need smart people who can ask smart questions. The "revolving door" and "regulatory capture" problems have been constant companions no matter which political party is in the White House.
Both parties need to re-consider the pitfalls whenever they find themselves answering, "The hiring departments at those agencies should be hiring people with specific experience in securities, banking, commodities, and so on."
That is how you become bogged down with group-think and yes-men. You will get people who are trapped in a paradigm and can't think independently. The "revolving door" regulators may not be intentionally corrupt. They simply have a difficult time not sympathizing all the time with those they are regulating -- who are usually their former (and future) colleagues. They simply cannot help themselves; their experience has become a liability, rather than an asset, to the regulatory function.
In the regulatory agencies, you need people who are both independent and incorruptible. Some of them may say that it takes a wolf to catch a wolf, but has that ever worked? It didn't allow the feds to catch Madoff nor any others.
The last full reform of the federal civil service in the late 1970s tried to move towards a model, at least at the executive level, where subject matter expertise was secondary to managerial competence. That effort has failed. Professional specialization in the world economy has only accelerated since then, and the government sector has not been immune; people continue to get promoted into executive positions based on their subject matter experience and mastery rather than their management competence. It may be time to give reform another try. But that is a long-term goal.
In the short-term, make sure that federal agencies save the taxpayer money by no longer bringing in costly Wall Street law firms and financial consultants to perform work that civil servants could perform just as skillfully and at a much lower cost.
Craigie Posted Friday, July 30, 2010 7:52 AM