The American Banker features two "insider perspectives" on the regulatory approach of Presidential candidates Obama and McCain:
Obama on Regulation
According to Daniel Tarullo, economic adviser to Obama
- The presumptive Democratic nominee backs a detailed list of programs
aimed at protecting consumers and clamping down on lending practices,
from an interest rate cap on high-cost loans to a foreclosure
prevention fund paid for by lenders.
- Sen. Obama's $10 billion foreclosure prevention fund, designed to help
troubled borrowers sell their home or restructure an unaffordable loan,
would be funded by penalties on lenders who commit fraud. He envisions
new disclosures that would help borrowers compare mortgage products,
and he would confront mortgage fraud by beefing up reporting,
increasing funding for enforcement, and raising fines.
- Prof. Tarullo said financial institutions should not fear an Obama
presidency, since the candidate would consider the trade-offs involved
in any policy choice. Bankers "may or may not agree with a position" taken by Sen. Obama,
"but they can be assured that he will have an understanding of the
costs and benefits of any particular approach," the adviser said.
- Sen. Obama also would create a public-private commission of experts to
warn Congress and the White House about emerging systemic risks in the
- Prof. Tarullo also discussed what Sen. Obama has not said; to ensure
credit does not dry up, the candidate has been careful to advocate a
moderate approach to imposing higher capital standards on nonbanks.
- "The fact that he focused" on regulatory reform and "talked about
things that one normally doesn't see presidential candidates talk about
reflects his commitment toward change" in the regulatory system, the
adviser said. "I frequently find, and not just with bankers but with
people in industry generally, that one of their biggest concerns is
that the position they're in in the markets is not understood by
regulators or political figures or others. As I have learned with Sen.
Obama … he is both an incredibly voracious consumer of information
about all things, including the economy, and a very quick study."
McCain on Regulation
According to Douglas Holtz-Eakin chief economic adviser to McCain
- Sen. McCain believes it is important to wait until the credit turmoil
is better understood before committing government resources…Whether as a result of caution or a focus on other issues, Sen.
McCain's financial services platform is less detailed than that of Obama
- The candidate has said he would like to create a Justice Department
task force to investigate potential mortgage abuses and help state
attorneys general in their investigations of lending practices.
- McCain also would expand the government's ability to guarantee
student loans, because the credit crunch has reduced such financing.
- According to Mr. Holtz-Eakin, the candidate opposes government programs
to help consumers trying to buy homes out of foreclosure — programs
generally seen as a tool for affordable housing and for avoiding a
buildup of vacant properties — because they could wind up encouraging
Read more (subscription required for American Banker):
Obama and Regulation, an Insider's Perspective
Foreclosure fund, bankruptcy reform among his proposals
Wednesday, June 4, 2008
By Joe Adler
McCain and Regulation, An Insider's Perspective
Eyes mortgage-abuse task force, FHA role; a go-slow approach
Thursday, June 5, 2008
By Joe Adler