Fed Governor Tarullo Is Coming to Regulate That A$$
IMHO, someone is positioning himself to be perceived as having one hell of a pair of financial balls.
I think it makes sense now. I couldn't figure out why Tarullo's name was overloading my inbox (that sounds dirty) lately, as if he had nothing better to do but give speeches about obvious things like TBTF and what else, regulation.
Confronting Too Big to Fail, October 21
on the state of the banking industry October 14
In the Wake of the Crisis October 8
on International cooperation to modernize financial regulation Sept 30
That last one sounds horribly contrived, doesn't it? Anyway. He's been busy.
Well look who gets a huge rub in WSJ? What's Tarullo lining himself up for??
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.
New guidelines on bankers' pay proposed by the Fed last week reflect Mr. Tarullo's influence. 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.
Installed by Fed Chairman Ben Bernanke as chairman of the Fed committee that oversees supervision and regulation, Mr. Tarullo is emerging as one of a handful of new Obama-appointed regulators who are changing the tone and substance of business regulation in areas from derivatives to drugs.
Inside the Fed, where Mr. Tarullo succeeded a Bush-appointed free-market economist in the banking oversight post, the transition hasn't been seamless. Some Fed officials said privately Mr. Tarullo can have an overbearing skepticism of banks and supervisors. Some Fed staffers are so wary of being second-guessed they ask him to approve even mundane bank applications.
Personally I enjoyed the sound of "one of regulators' toughest tools" when taken out of context:
"Things are going to change more," Mr. Tarullo told a Senate hearing in October as if he were speaking to bankers. "That means business models. That means the way of assessing risk. That means how you run your institution." More than 100 banks have entered into written agreements with Fed supervisors to alter their behavior -- one of regulators' toughest tools -- since Mr. Tarullo joined the Fed in February, compared with just 38 in all of 2008.
Maybe he's trying to be the hero of CRE before it implodes (still waiting) as evidenced by recent comments (Reuters):
The financial system remains fragile and bank exposures to a deteriorating commercial real estate sector present a trouble spot, U.S. Federal Reserve Board Governor Daniel Tarullo said on Wednesday.
"While there have been some positive signals of late, the financial system remains fragile and key trouble spots remain," such as commercial real estate, he told a Senate Banking subcommittee.
"Prices for both existing commercial properties and for land ... have declined sharply in the first half of this year, suggesting that banks are vulnerable to significant further deterioration in their CRE loans," Tarullo said.
Mr. Tarullo is pushing Fed officials to account for past regulatory breakdowns, causing friction within the Fed. The Fed board in Washington delegates supervision of individual banks to the 12 regional Fed banks. A group led by Mr. Tarullo gave the Federal Reserve Bank of Atlanta a stinging internal review for weak bank supervision earlier this year. The Southeast has been plagued by bank failures. The 60-year-old head of bank supervision at the Atlanta Fed retired shortly after Mr. Tarullo came into power, and the Fed appointed three people from outside the area to temporarily run bank supervision in Atlanta, a sign several inside the central bank read as Washington tightening its scrutiny of regional offices.
Atlanta Fed president Dennis Lockhart, who took over in 2007, has pledged to review its practices. "After such a tumultuous period, it's important for financial regulators to fully understand what went wrong in the financial system, review their internal processes and practices and implement changes as appropriate," an Atlanta Fed spokeswoman said on behalf of Mr. Lockhart.
(is Atlanta Fed scared now that their head of banking supervision said "fuck you guys, I'm out of here" so loudly that he had to point out that he wasn't leaving because of any regulatory mishaps in Atlanta? See also: OMG Who Will Regulate the Sixth District?! Atlanta Fed's Supervisory Monkey Business)
It's unfortunate that I can't trust someone from the Fed who calls FAIL on his own institution. Paint me skeptical.
"There's going to be a lot of blame to go around to regulatory institutions, to private institutions," Mr. Tarullo told a Senate panel in July. "This was not a single failing; this was a broad-based failing." Among the government's failings, he said, were "an inadequate or flawed approach to supervision at the banking agencies, including the Fed."
Tarullo even knows how to end up on the right side of the line apparently, now this dude is starting to freak me out.
Yahoo, October 14 (and ignore the crap Zimbabwe Ben said, it's insignificant to this tale):
Other Fed officials on Thursday sounded cautiously optimistic notes on the economy while saying it is too soon to pull back the life support system.
"We're going to look at the data as it comes in. Right now I don't think it's time to raise interest rates," Richmond Fed President Jeffrey Lacker told reporters after a speech.
Another regional president of the U.S. central bank system, Richard Fisher of the Dallas Fed, echoed Lacker's comments.
"We're going to move when we have to move. But it's not now," Fisher said in an interview with The Wall Street Journal.
Speaking in Phoenix, Fed Governor Daniel Tarullo also backed the idea of keeping interest rates low for some time, if only because the economy's prospects are so unsettled.
"With the effects of the February stimulus package diminishing next year, bank lending that is still declining, and continued dysfunction in some parts of capital markets, there is considerable uncertainty as to how robust growth will be in 2010," he said at a community leaders lunch.
Pound those asses, Tarullo. Um, in the regulatory sense.
This video seems appropriate.