In the heat of the financial crisis last year, there were widespread calls for the government to merge several banking regulatory agencies into one to reduce gaps in oversight and stop what might be called "regulator shopping."
For example, AIG was able to choose the Office of Thrift Supervision for its non-insurance financial business when it bought a small savings and loan in the late 1990s. That office has been viewed as a weaker regulator, and was strongly criticized in a government report this year for ignoring repeated warning signs about Pasadena-based IndyMac Bancorp before the thrift's failure last summer.
"I'm concerned that people think we've stepped back from the brink of disaster and so they're not as committed to seeing real meaningful reforms adopted," said Barbara Roper, director of investor protection for the Consumer Federation of America.
For their part, business groups have worried that the Obama administration might go too far in responding to the financial crisis with new regulations, stifling the market and hurting financial firms at a time when the economy is still weak.
They have been pushing back against some of the proposals floated by the administration, lawmakers and consumer advocates, such as a consumer protection agency for financial products.
But Scott Talbott, chief lobbyist for the Financial Services Roundtable, which represents large financial institutions, said there was still a strong impetus in Washington for regulatory reform and dismissed the suggestion that the Obama administration had missed its chance to implement it.
"This has moved at lightning speed," he said. "You're talking about a historic piece of reform."
Administration officials also have dismissed suggestions that they had moved too slowly, saying they had pushed ahead despite calls from some quarters for them to wait until the end of the crisis before acting.
"There are people who believe that the wrong time to reorganize the fire department is while the fire may still be burning," Lawrence H. Summers, chairman of the White House's National Economic Council and Obama's chief economic advisor, said in a speech Friday. "The president has concluded very strongly that that view is wrong. . . . Experience teaches that once the crisis has passed, the will to reform will pass as well."
Douglas J. Elliott, an economics fellow at the Brookings Institution and a former investment banker, said there was still enough political momentum to pass major reforms. But as the financial crisis has eased, there is less ability to tackle the difficult turf battles involved in merging regulatory agencies.
For that reason, Elliott said, the Obama administration appeared more focused on setting new rules and principles than on the blowing up the government's regulatory structure.
"There are entrenched interests that benefit and are allied with each of these agencies. . . . That just makes it hard," he said.
"As far as I can tell, the administration doesn't think it's as important to get that structure right as to get the rules right and make sure people are focused on acting the right way."
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jim.puzzanghera@latimes.com
