Main Street Fighting Treasury Blueprint
Main St.
Fighting Treasury Blueprint
By Jeffrey H. Birnbaum
Washington Post Staff Writer
Friday, April 11, 2008; D01
Several major business organizations are banding together to
fight the Treasury Department‘s plan to overhaul the nation's
patchwork of financial regulation, less than two weeks after
the proposal was unveiled.
Treasury Secretary Henry M. Paulson Jr. offered a blueprint
for a sweeping consolidation of federal oversight of financial
institutions and markets March 31. Since then, lobby groups
that represent small banks, insurance agents and credit
unions, among others, have been making plans to work together
to defeat the proposal. Some have dispatched their members to
Capitol Hill to protest.
The groups are coalescing around the argument that the plan
would help big Wall Street firms
and harm smaller companies that cater primarily to
"The winner was Wall Street, and the loser was
One of the largest and most influential groups in the nascent
coalition is the Independent Insurance Agents & Brokers of
America. The "Big I," as the group calls itself, held a major
convention in
Traveling to Congress by Metro, taxi and bus, the agents and
brokers visited lawmakers from all 50 states and made the case
that the blueprint's provision that would allow insurance
companies to choose between a new federal regulator or
traditional oversight by state agencies would be confusing.
The agents said it would make their jobs more difficult if the
insurance companies they deal with end up answering to a
variety of regulators.
Robert Rusbuldt, the group's chief executive, said he has also
been talking to lobbyists for the independent bankers, credit
unions and others about forming a coalition that would work to
prevent the Treasury proposal from becoming law.
"We are all united in having a problem with the overall
Treasury proposal," Rusbuldt said.
The Treasury's initiatives seek to do away with the current
system of regulation over the coming decade and substitute
three powerful agencies that would oversee banking, market
stability and consumer and investor protection. The plan's
proponents say such changes are needed because government
oversight has not kept up with the pace of innovation in the
financial markets.
Other groups talking about forming an opposition coalition
include the Conference of State Bank Supervisors, which
represents state bank regulators, and the Credit Union
National Association.
Like the insurance agents, bank supervisors have been
traipsing through the halls of Congress. Last week, the
organization held its annual "fly-in," which brought into town
49 bank commissioners and deputies from 29 states. They used
the occasion to head to Capitol Hill to complain about the
Treasury proposal. They asserted that the plan would lead to
the elimination of state banking charters, which they oversee.
The supervisors said these have kept local banks safe and
sound for decades.
Neil Milner, president of the Conference of State Bank
Supervisors, said he is coordinating his efforts with other
groups that oppose parts of the blueprint. "We've been talking
to many groups to rally as much opposition as we can," he
said.
The country's business lobby is split over the Treasury
proposal. Groups that represent larger companies, which often
do business across the country, tend to be more supportive of
the plan than those that represent smaller, more local
entities. The U.S. Chamber of Commerce and the Business
Roundtable example, have spoken highly of the Treasury's
effort, while not endorsing all of its elements.
"The current regulatory structure is outdated and broken,"
said the Chamber's David Hirschmann. "We are supportive of the
need to modernize our regulatory system."
Some of the groups dissatisfied with the blueprint also nod to
the need for change but complain about how it affects their
sectors.
Community bankers are particularly outspoken. "Treasury is
saying, 'Let's pull up the entire tree by its roots,' " Fine
said about the blueprint's banking provisions. "In that kind
of fight, we need to have all the allies we can."
These bankers dislike the Treasury's plan because, they say,
it would end the separate charter for thrift institutions.
This could ultimately subject them to different regulations
from those they are accustomed to.
"If one or another section of it [the blueprint] begins to get
traction, then we can gear something up rapidly," Fine added.
"Everybody's touching base, putting their ducks in a row, so
if we have to flip the switch, we can do it fast."
Daniel A. Mica, president of the Credit Union National
Association, gives the blueprint little chance of moving ahead
in Congress anytime soon.
Nevertheless, Mica said, his members have been outraged, and
he has had to ask them to mute their response to avoid
"overkill." To put their view on the record officially, Mica
has asked the heads of his state associations and directors of
some credit unions to write to Treasury to say that credit
unions are working well now and do not need a new regulator.
They fear credit unions might disappear under a different
regulatory scheme.
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