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I'm both amused and disturbed by this incident.  I'm glad to see that the Treasury Secretary has a temper.  Too bad it's reserved for other banking regulators, not the financial services industry.  (Were mortgage servicers and credit card executives treated to the parade of expletives in their recent meetings?)   

But the incident also recalls Clinton Treasury Secretary Bob Rubin and Fed Chairman Greenspan, and SEC Chair Arthur Levitt bullying CFTC Chair Brooksley Born off her plan to regulate OTC derivates, regulation that might have averted some of the present crisis.  

It's important to remember that most of the regulators at the meeting are part of independent agencies, and that they are independent with good reason.  The CFTC, the FDIC, the Federal Reserve, and the SEC are all independent agencies.  They do not answer to the President, much less to his Treasury Secretary.  While some of their boards are appointed by the President with advice and consent of the Senate, they are not at-will employees of the President nor are they his agents.  Only the OCC and OTS are within Geithner's chain of command, and by statute the Treasury Secretary has but limited authority over them.  (See 12 USC 1, 12 USC 1462a(b)(3).)  

These agencies are independent because we want independent expertise, not politically-controlled expertise, and we should want it to stay that way.  Geithner is no doubt correct that this is a case of agencies jealously guarding their own turf.  But there are also good, independent reasons to question the wisdom of the Obama financial regulation reform plan.  There are plenty of people not affiliated with any of the agencies who have misgivings about the plan, and if federal banking regulators have qualms about it, they should speak up and we should listen, even if we don't agree.  

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