The Journal this morning offers a classic beat-sweetener, a profile of a tough new banking regulator appointed to clean up the terrible mess created by the lax old banking regulator about whom readers weren’t, um, told at the time, but, who, now, in his laxity, can be exposed, if only to serve as a contrast to the new, tough one.
The story introduces readers to Daniel Tarullo, a lawyer appointed to the Fed committee that oversees banking supervision, who, unlike the (unnamed, not tough) Bush free-market flunky he succeeds, is apparently on the case.
There is nothing actually wrong with the piece, as far as I can see, but readers should be aware that the new-sheriff-in-town story is a business press staple and should be read as such. It’s not the same as serious and sustained regulatory coverage.
And this version is pretty laudatory, even as these things go.
Party time? That’s so 2005, the Journal says:
The rise of Daniel Tarullo, a lawyer with a longstanding interest in bank regulation appointed to the Federal Reserve Board by President Barack Obama, is a sign the era of light-touch bank regulation is over.
He’s shakin’ things up and fillin’ gaps:
He is shaking up the Fed’s 2,858-person army of bank supervisors, weighing in on issues ranging from the way regulators deal with troubled commercial real estate loans to the rules that will govern global banking for years to come.
“Dan is filling a gap,” says Richard Fisher, president of the Federal Reserve Bank of Dallas. During the Greenspan era, Mr. Fisher says, banking supervision in Washington was “de-emphasized.” Now, after a banking calamity, it’s a priority.
He is academic yet assertive; a tireless BlackBerryer, he sees things from many angles,
Like Mr. Bernanke, Mr.Tarullo runs meetings like academic seminars and pushes staffers and others to explore problems from different angles. Both believe regulators need to carefully hone incentives that drive bank decisions. He is an assertive overseer. Mr. Tarullo returned staff proposals on new bank pay rules with long lists of questions and comments. Some staffers got emails from his BlackBerry while he was sitting beside Mr. Bernanke at Washington Nationals baseball games this summer.
Yea, from both great heights and from the ground he seethe:
“He sees all parts of the picture, from 100,000 feet down to the details,” said Lawrence Summers, director of the White House National Economic Council.
It is good to know banking supervision is a Fed priority now. I’ll point out, however, that it would have been better to have known that it wasn’t a priority then. This is as good a time as any to call again for watchful, regular, and tenacious, not formulaic, regulatory coverage. As I discussed back in December 2007, business reporting into Bush-era regulatory failures occurred almost entirely after-the-fact. That’s a failure of editorial imagination.
I have no reason to doubt any of this morning’s piece on Tarullo. The story includes valuable information that he has already replaced the apparently lax head of the Atlanta Fed and plans a review of its crucial New York operation.
But a bit of context is order. For one thing, as this Times story makes clear, Tarullo is against breaking up too-big-to-fail institutions, so he’s not as tough as, for instance, the governor of the Bank of England:
The prevailing view in Washington, however, is more restrained. Daniel K. Tarullo, an appointee of President Obama’s, last week dismissed the idea of breaking up big banks as “more a provocative idea than a proposal.”
And in general, this morning’s piece reminds me of another Journal story from back in August 2005:
Bank Regulator Cleans House —- New Comptroller of the Currency Makes Supervision a Priority
That one heralded the arrival of John* Dugan to replace, John D. Hawke, a Clinton-appointee, and, it is true, a bona fide hack. And while Dugan has not emerged as a particular villain of the financial crisis, he’s nobody’s idea of a hero either.
(*I originally said “Gerald.” God knows why.)