Magazine article American Banker

Washington People @BY#BY Rob Blackwell, Michele Heller, Damian Paletta, and Craig Linder

Magazine article American Banker

Washington People @BY#BY Rob Blackwell, Michele Heller, Damian Paletta, and Craig Linder

Article excerpt

A Penny Saved

Gen. Wesley Clark has come up with a novel way to save the government some money if he is elected President: eliminate the Office of Thrift Supervision.

The OTS is funded exclusively from assessments on regulated institutions, so it does not draw on taxpayer funds, as other government agencies do.

However, the retired general's campaign argues, correctly, that the OTS is technically on the budget, and therefore all of its expenses count against the government's bottom line. It says that if the OTS were merged with another agency, such as the Office of the Comptroller of the Currency, the government would reap the benefit of fewer overhead expenses.

But most experts agree any such savings would be very small, especially when compared with the $225 billion Gen. Clark hopes to save over 10 years. Bert Ely, an independent analyst in Alexandria, Va., calculated that the annual savings from an OCC-OTS merger would be less than $16 million.

He also says that such a merger would likely result in lower fees for banks and thrifts, as the merged agency would kick back the overhead savings to its regulated entities in order to compete better with lower-cost state agencies. "The idea that the modest cost savings would drop down to the [government's] bottom line is very, very dubious."

Keep On Plowing

Wayne Abernathy, the Treasury Department's assistant secretary for financial institutions, must have had the 19th century on his mind last week.

Asked how the Bush administration would overcome objections to its plan to overhaul regulation of the government-sponsored housing enterprises, Mr. Abernathy invoked one of the final campaigns of the Civil War.

"I would liken it to the Overland Campaign," Mr. Abernathy said, who in his spare time is a Civil War reenactor. "That was in 1864, when Ulysses S. Grant was given control of the army and marched against Robert E. Lee and drove him to the gates of Richmond. He never won a battle between Washington and Richmond, but he kept on moving, because he was persistent. That is what we intend to do."

Then, to make his point that lawmakers are giving the GSEs' objections too much weight, Mr. Abernathy compared Fannie Mae and Freddie Mac to farm animals.

"I think we need to listen to the regulated entities, but I think you can take that too far," he said. "It reminds me of a plow horse. Obviously, a plow horse doesn't want to get inside the harness. But the farmer doesn't consult the horse about the harness, because he bought the horse to plow the field."

Veep for Leach

Vice President Dick Cheney traveled to the Cedar Rapids Exhibition Center in Iowa last week to stump for Rep. Jim Leach. The Vice President described Rep. Leach as a friend "for many, many years" and "one of the most respected members of Congress."

The two met in 1969, when they both worked for Donald Rumsfeld, now the defense secretary, in the Office of Economic Opportunity.

"Jim and I don't always agree on every issue, but there was never any doubt in my mind that he arrived at his views and position after careful and thoughtful deliberation, and as a matter of deep, personal conviction," Vice President Cheney said. "His colleagues in both parties know him as a careful thinker, an independent voice, and a devoted public servant. …

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