Wells Fargo Chief Sides With Bair Against Single Regulator


Wells Fargo chief Jon Stumpf yesterday publicly joined that opposition to the plan to empower a single regulator to oversee risk-taking by banks. Sheila Bair penned an op-ed in the New York Times announcing her opposition.

“I think that’s a mistake,” Stumpf said in an interview broadcast yesterday on Bloomberg Television. “You could get the benefit of a systemic regulator and also the benefit of differing points of view in a council.” 

Bair had called for the monitoring and failure resolution powers of a systemic regulator to be shared by a council of regulators.  She argued that a council would allow regulators with differing expertise to operate together and would prevent big banks from capturing the regulatory structure by having too much sway over one agency. 

Supporters of a single regulator worry about “regulatory shopping,” where financial companies seek out the loosest regulatory regime. This, in turn, might create a “race to the bottom,” where regualtors compete with each other to attract companies to come under their supervision by lowering regulations.  What’s more, empowering a single agency would create more accountability. We’d know who to blame when things went wrong.

There is something very perverse, however, about expanding and centralizing the powers of a regulatory agency in light of the massive regulatory failures that contributed to our decline. The problems of the various regulators was not a lack of authority–it was a lack of foresight and knowledge. Regulators just didn’t understand what was happening. And this knowledge problem is made more likely by centralization rather than less.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.