Banking Law

On Monday, David Milstead, the Finance Editor of The Rocky Mountain News, circulated a list of questions to an assortment of heavy hitters in financial services in Colorado (although he appears to have left off a number of others), about the just-announced "Paulson Blueprint" for the reorganization of regulation of financial institutions at the federal level. On April Fool's Day, he published the responses.

Here are the questions:

* Is this necessary? Was the current system really broken?

* Will it be more effective than the current system?

* Is it "too easy" on Wall Street, as some critics have said? Who is being protected in this proposed system?

* What are the perils and pluses of moving, in some cases, away from state regulation to federal regulation?

* Should regulators be competing to be the 'regulator of choice' for the subjects of regulation?

* Is it too early in the current problem environment to try to craft an overhaul plan?

In light of the act that the respondents had not been given sufficient time to review the plan in detail and give it any thought, I'm not sure what, if anything, of value Mr. Milstead was trying to accomplish, other than to fill space. I think Phil Feigin, former Colorado Securities Commissioner and now toiling like many of us in the sweat shop of private practice, got off the best opening line:  "I have certainly not had the time to digest the whole report."

Many of the answers are interesting, if predictable given the roles of each of the respondents.

Ray Friedlob, an attorney with a firm where I once toiled back before Caesar had conquered Gaul, threatened to bloviate but then, thankfully, backed off.

Since I deal with this so much I could take pages and hours to answer but will only relate a few top of mind observations.

I fought off an attack of narcolepsy and read the rest of his comments. In private practice, we only grind out pages and hours when we're paid by the page or the hour, so I knew he was all hat and no cattle with those threats. Unless you're being paid to spend time, efficiency rules the day.

Ultimately, Ray kicked a corpse while he was down by blaming it all on Greenspan. I guess Ray either doesn't know Hillary Clinton's plans to resurrect Alan from the dead or he doesn't care.

Jeff Wilson used the term "Subprime Tsunami," and should be fined, beaten, and left in a ditch for that infraction. Otherwise, his line "the regulators don't prevent problems. At best, they manage them, and in some cases, they actually manufacture them," is a keeper, which I intend to steal and use repeatedly without any attribution. Being a sociopath has its rewards.

I also loved credit union CEO Doug Ferraro's bon mot.

This reactionary proposal is like cleaning a bug off your windshield with a fire hose. It is an entirely misplaced attempt to fix a real issue by creating 100 bigger problems.

As that guy in the Chevy truck commercials says: "Sweet!"

Taylor Kirkpatrick admitted in his opening sentence that he is an investment banker, thereby destroying his credibility for all that followed, as sage as it might be. I immediately switched to YouTube and watched the latest "Girls Gone Wild" video.

Phil Feigin had a number of good lines, in addition to the one noted above, including  "I have a hard time believing this proposal will go anywhere." To that I give a hearty thumbs up and an approving inflection of "Dude!"

David Peterson, another investment banker, smacked down the regulators.

It is very difficult to take these regulators pleas seriously when it appears that they are more concerned with protecting their turf than fulfilling their public service roles.

I assume that David's taken the same approach as the authors of Bank Lawyer's Blog: what can they do to us: eat us? I also assume that he hasn't got any applications pending with any regulatory agencies at the moment.

Proving that I'm not completely suicidal, I'll leave Colorado Banking Commissioner Richard Fulkerson alone. However, I have had experience with Richard in his prior life as a Supervisory Agent with the OTS, and I will give him the ultimate compliment: he's no Sheila Bair.

Don Childears, the CEO of the Colorado Bankers Association, makes the following telling point, echoing Phil Feigin:

Despite some merit to the proposals I can?t see anything passing in the next year ? due to a GOP President negotiating with Democrats in Congress (who think they will have the White House in a year), and regulated entities having differing views among their ranks and with regulators who also are jockeying for position.

Unlike Don, who's salaried, I bill by the hour and blog for free (try living off of click-through ad revenues from a blog that discusses bank laws), and, therefore, I'd have to say that spending a great deal of time parsing the nuances of the "Paulson Plan" is a non-starter. The "Blueprint" is going nowhere this year, so why spend a lot of time worrying about it when we've got more urgent issues to occupy us? It's a lame proposal by a lame duck administration, and the Democrats, who control both houses of Congress, have already pronounced it DOA.

Nevertheless, we've managed to squeeze one MSM newspaper column and a lowly blog post out of it, so it's served a higher purpose, hasn't it? Now, back to Jessica Simpson's kidneys.