BU Now » Treasury Department

FDIC gets more authority over banks

Dick Taffe — Mon, 12 Jul 2010 20:36:48 +0000

During the Crash of 2008, the Federal Deposit Insurance Corporation said it lacked access to need information to evaluate the risk being taken by banks which later either collapsed or needed taxpayer bailouts to stay afloat. Now regulators at the Federal Reserve and Treasury Department have given the FDIC specific, unlimited authority to examine banks. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and a former counsel to the Fed Board of Governors, says the agreement is an improvement in interagency cooperation, but sound bank regulation ought not be something negotiated among sometimes competing federal agencies.

“Coming on the eve of financial reform legislation passing the Senate, it serves principally to highlight the opportunity that Congress and the administration missed by their failure to make part of the new reform law a rationalization of our chaotic bank regulatory apparatus.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

Financial regulatory reform crunch time

Dick Taffe — Mon, 24 May 2010 16:01:50 +0000

Capitol Hill negotiators from the House and Senate committees dealing with financial regulatory reform are getting down to the details of working out differences between the bills passed in respective chambers, with Democrats holding the majority votes in both. Former Federal Reserve Bank examiner Mark Williams, who teaches finance in the School of Management and is author of “Uncontrolled Risk” about the fall of Lehman Brothers, says the Fed simply isn’t equipped to take on any new oversight role over banks — as the Senate bill dictates.

“At the Fed, bank examiners continue to be underpaid, lack advanced training in the ways of Wall Street, and are saddled with risk-measurement systems that lag the Street.”

Contact Mark Williams, 617-358-2789, williams@bu.edu

Small banks slow at bailout payack

Dick Taffe — Thu, 18 Mar 2010 20:54:01 +0000

While most of the huge banks which got taxpayer bailouts last year have paid back their TARP loans, hundreds of community banks haven’t. Robert Bench, a former deputy Comptroller of the Currency and now a senior fellow at BU Law’s Morin Center for Banking and Financial Law, says it’s no surprise. Too many real estate development and commercial real estate loans and inability to raise capital, he says.

“The ‘Volcker Rule’ seeks to redirect the largest banks back to serving the broader financial needs of America. Perhaps we also need new rules for more diversification of loan portfolios at community financial institutions.”

Contact Robert Bench, 617-353-5428, bobbench@bu.edu

Citigroup CEO says things ‘different’

Dick Taffe — Thu, 04 Mar 2010 19:40:01 +0000

Citigroup CEO Vikram Pandit told a Congressional panel that the bank is “fundamentally different” since it took $45 billion in taxpayer bailout money last year. But Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says Congress should be asking why taxpayers were’t given more effective oversight of Citigroup after the bailout.

“Rather than grilling Mr. Pandit on how he runs Citigroup, the Congressional TARP panel should be asking Treasury officials, past and present, why the U.S. did not demand representation on the Citigroup board of directors. As long as the taxpayers are the largest shareholders of the company, this is the most effective way to provide oversight in the public interest.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

Financial reform update

Dick Taffe — Thu, 25 Feb 2010 16:20:24 +0000

Major components of financial-reform legislation are taking shape, with the Obama administration relaxing its insistance on a stand-alone consumer protection agency and the “Volker Rule” allowing regulators to bar banks from risky investments losing support. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, said cutting the “Volker Rule” is a loss.

“Grafting this complex proposal onto the Administration’s plan at the eleventh hour was overly ambitious. Half-hearted efforts by a Wall Street-enamored Treasury Department and White House economists ensured Chairman Volcker’s very credible proposal would never receive a fair hearing.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

More power to Treasury secretary?

Dick Taffe — Fri, 19 Feb 2010 17:37:00 +0000

Senate Banking Committee Chairman Chris Dodd will propose a council of regulators — headed by the Treasury secretary — be created to monitor systemic risk across the financial spectrum. Former Federal Reserve Bank examiner Mark Williams, who teaches finance in the School of Management is is author of “Uncontrolled Risk” about the fall of Lehman Brothers, says the regulators haven’t yet earned it.

“Before this important role is handed over, these regulators need to demonstrate they have fixed the gaps in bank oversight and early risk detection. Unfortunately, there have been no high-level changes at any of the U.S. regulatory agencies nor any independent reports completed indicating why our watchdogs did not bark.”

Contact Mark Williams, 617-358-2789, williams@bu.edu

Treasury less than candid with bailout

Dick Taffe — Mon, 05 Oct 2009 19:38:26 +0000

A report from the inspector general overseeing the government’s bailout of the banking system says the Treasury Department was less than candid last fall about the health of the bailed-out banks. Visiting law Professor Elizabeth Nowicki, a former SEC attorney and Wall Street lawyer, says such lack of transparancy is what caused a run on the banks decades ago.

“It simply does not make good sense from the standpoint of shareholder and economic confidence for the Treasury Department — and any financial entity — to be anything less than completely honest, particularly in a time of banking turmoil and finance difficulty.”

Contact Elizabeth Nowicki at enowicki@bu.edu

White House Outlines Offshore-Tax fixes

Dick Taffe — Mon, 11 May 2009 20:43:44 +0000

With the White House unveiling a $210 billion plan to tax more of U.S. firms’ overseas earnings and crack down on tax-avoidance loopholes, School of Law Professor Daniel Berman, a former Treasury Department official and now director of the graduate tax program, can look at the historical track record of presidents on such proposals.

“Many of these proposals have been kicking around for a while. The proposal on dual-capacity taxpayers, for example (applying to special levies where the taxpayer gets an economic benefit) was something that I wrote and got included in the president’s budget proposals more than a dozen years ago.”

Contact Daniel Berman, 617-353-3105, bermand@bu.edu