CREW I citizens for responsibility

and ethics in washington

July 1,2009

By facsimile (202-622-3895) and first-class mail

FOIAIPA Request

Departmental Offices

Disclosure Services

Department of the Treasury

Washington, DC 20220

Re: Freedom of Infonnation Act Request

Dear Sir or Madam:

Citizens for Responsibility and Ethics in Washington ("CREW") makes this request for
records, regardless of fonnat, mediwn, or physical characteristics, and including electronic
records and infonnation, audiotapes, videotapes, and photographs, pursuant to the Freedom of
Infonnation Act ("FOIA"), 5 U.S.C. § 552, et seq., and U.S. Department ofthe Treasury
("Treasury") FOIA Regulation 31 C.F.R. Part 1.

CREW seeks records related to development of the financial regulatory refonns proposed
by President Obama and Secretary Timothy Geithner on June 17,2009. Specifically, CREW
seeks records related to meetings, telephone conferences, or conference calls between Treasury
officials, including but not limited to Secretary Geithner and Deputy Secretary Neal S. Wolin,
and financial industry lobbyists and executives, representatives of financial industry trade
associations, consumer groups, labor unions, and other individuals or groups regarding the
proposed refonns.

News reports indicate senior Treasury officials met with numerous financial industry
lobbyists and executives in the months before the refonns were proposed, including
representatives of: Goldman Sachs, MetLife, Allstate, JP Morgan Chase, Credit Suisse,
Citigroup, Barclays, UBS, Deutsche Bank, Morgan Stanley, Travelers, Prudential, Wells Fargo,
Independent Community Bankers of America, American Council of Life Insurance, National
Association of Insurance Commissioners, American Insurance Association, various property and
casualty insurance companies, and fmancial industry trade associations. See Stephen Labaton,
Obama Sought Range of Views on Finance Rules, N.Y Times, June 17,2009 (attached); David
Cho and Zachary A. Goldfarb, Core Refonns Held Finn as Much Else Fell Away, Wash. Post,
June 18,2009 (attached). CREW's request includes, but is not limited to records related to
meetings with these particular individuals and groups.

CREW also seeks any and all documents, including but not limited to proposals,
recommendations, memoranda, analyses, white papers, meeting agendas, and briefing materials
provided by financial industry lobbyists and executives, representatives of financial industry

1400 Eye Street, NW., Suite 450, Washington, D.C. 20005 I 202.408.5565 phone I 202.588.5020 fax I www.citizensforethics.org
trade associations, consumer groups, labor unions, and other individuals or groups regarding the
proposed reforms.

Please search for responsive records regardless of format, medium, or physical

characteristics. We seek records of any kind, including electronic records, audiotapes,
videotapes, photographs, and back-up tapes. Our request includes any telephone messages, voice
mail messages, daily agenda and calendars, information about scheduled meetings and/or
discussions, whether in-person or over the telephone, agendas for those meetings and/or
discussions, participants included in those meetings and/or discussions, minutes of any such
meetings and/or discussions, the topics discussed at those meetings and/or discussions, e-mail
regarding meetings and/or discussions, e-mail or facsimiles sent as a result of those meetings
and/or discussions, and transcripts and notes of any such meetings and/or discussions to the
extent they relate to the aforementioned requested information.

If it is your position that any portion of the requested records is exempt from disclosure,
CREW requests that you provide an index of those documents as required under Vaughn v.
Rosen, 484 F.2d 820 (D.C. Cir. 1973), cert. denied, 415 U.S. 977 (1972). As you are aware, a
Vaughn index must describe each document claimed as exempt with sufficient specificity "to
permit a reasoned judgment as to whether the material is actually exempt under FOIA."
Founding Church of Scientology v. Bell, 603 F.2d 945, 959 (D.C. Cir. 1979). Moreover, the
Vaughn index must "describe each document or portion thereof withheld, and for each
withholding it must discuss the consequences of supplying the sought-after-information." King
v. United States Dep't of Justice, 830 F.2d 210,223-24 (D.C. Cir. 1987) (emphasis added).
Further, "the withholding agency must supply 'a relatively detailed justification, specifically
identifying the reasons why a particular exemption is relevant and correlating those claims with
the particular part of a withheld document to which they apply. '" Id. at 224, citing Mead Data
Central v. United States Dep't of the Air Force, 566 F.2d 242, 251 (D.C. Cir. 1977).

In the event some portions of the requested records are properly exempt from disclosure, please
disclose any reasonably segregable non-exempt portions ofthe requested records. See 5 U.S.C.
§ 552(b) ("Any reasonably segregable portion of a records shall be provided to any person
requesting such record after deletion of the portions which are exempt ..."); see also
Schiller v. Nat'l Labor Relations Bd., 964 F.2d 1205, 1209 (D.C. Cir. 1992). If it is your
position that a document contains non-exempt segments, but those non-exempt segments are so
dispersed throughout the document as to make segregation impossible, please state what portion
of the document is non-exempt and how the material is dispersed throughout the documents.
Mead Data Central, 566 F.2d at 261. Claims ofnon-segregability must be made with the same
degree of detail as required for claims of exemption in a Vaughn index. If a request is denied in
whole, please state specifically that it is not reasonable to segregate portions of the record for
release.

2
 Public Interest Fee Waiver Request

In accordance with 5 U.S.C. § 552(a)(4)(A)(iii) and Treasury FOIA Regulation 31

C.F.R. § 1.7, CREW requests a waiver of fees associated with processing this request for
records. The subject of this request concerns the operations of the federal government and the
disclosures likely will contribute to a better understanding of relevant government procedures
by CREW and the general public in a significant way. Moreover, the request is primarily and
fundamentally for non-commercial purposes. 5 U.S.C. § 552(a)(4)(A)(iii). See, e.g., McClellan
Ecological v. Carlucci, 835 F.2d 1282, 1285 (9th Cir. 1987).

This subject is of particular importance to the public in light of newspaper articles

reporting that senior Treasury officials frequently met with financial industry lobbyists and
executives in the months before the reform plan was unveiled. Moreover, these reports indicate
Treasury and President Obama changed various aspects of the proposal based on lobbying by
financial industry representatives and others. For example, a draft of the plan proposed merging
four federal banking regulators into a single agency and combining the Securities Exchange
Commission and the Commodities Futures Trading Commission, but neither proposal survived
to be included in the proposed reforms. See Cho and Goldfarb, supra. Similarly, the
administration dropped a proposal to establish a national insurance regulator after being
pressured by some insurance companies. Id. These records are likely to contribute to the
public's understanding of the influence that financial industry lobbyists and executives, and
representatives of financial industry trade associations, consumer groups, and labor unions have
had, or attempted to have, on Treasury and Secretary Geithner in formulating the financial
regulatory reform plan.

CREW is a non-profit corporation, organized under section 501(c)(3) of the Internal

Revenue Code. CREW is committed to protecting the right of citizens to be aware of the
activities of government officials and to ensuring the integrity of those officials. CREW is
dedicated to empowering citizens to have an influential voice in government decisions and in
the government decision-making process. The release of information garnered through this
request is not in CREW's financial interest. CREW will analyze the information responsive to
this request, and likely will share its analysis with the public, either through memoranda, reports
or press releases. CREW has an established record of carrying out these types of activities, as
evidenced through its website, www.citizensforethics.org. Currently, the CREW website
contains links to thousands of pages of documents acquired from multiple FOIA requests. See
http://citizensforethics.org/activities/foia.php. Visitors to CREW's website can peruse the
FOIA request letters, the responses from government agencies, and a growing number of
documents responding to FOIA requests. CREW's virtual reading room provides around-the­
clock access to anyone willing to learn about the government activities that were the focus of
CREW's FOIA requests. The CREW website also includes documents relating to CREW's
FOIA litigation, Internal Revenue Service complaints, and Federal Election Commission
complaints.

Under these circumstances, CREW satisfies fully the criteria for a fee waiver.

3
 News Media Fee Waiver Request

CREW also asks that it not be charged search or review fees for this request because
CREW qualifies as a "representative ofthe news media" pursuant to the FOIA and Treasury
FOIA Regulation 31 C.F.R. § 1.5. In National Security Archive v. U.S. Department of Defense,
880 F.2d 1381, 1386 (D.C. Cir. 1989), the Court of Appeals for the District of Columbia Circuit
found the National Security Archive was a representative of the news media under the FOIA.
The court noted the legislative history of the FOIA indicated the phrase "representative of the
news media" was to be interpreted broadly, and cited the legislative history recognizing: "It is
critical that the phrase 'representative of the news media' be broadly interpreted if the act is to
work as expected. . .. In fact, any person or organization which regularly publishes or
disseminates iriformation to the public . .. should qualify for waivers as a 'representative ofthe
news media. '" 132 Cong.Rec. S14298 (daily ed. Sept. 30, 1986) (emphasis added). Id.

CREW routinely and systematically disseminates information to the public in several

ways. First, CREW maintains a frequently visited web site, www.citizensforethics.org, that
received 114,015 visits in May 2009. The website reports the latest developments and contains
in-depth information about a variety of activities of government agencies and officials.

Second, since May 2007 CREW has published an online newsletter, CREWCuts, that
currently has 13,912 subscribers. CREWCuts provides subscribers with regular updates
regarding CREW's activities and information the organization has received from government
entities. A complete archive of past CREWCuts is available at
http://www.citizensforethics.org/newsletter.

Third, CREW publishes a blog, Citizens blogging for responsibility and ethics in
Washington, that reports on and analyzes newsworthy developments regarding government
ethics and corruption. The blog, located at http://www.citiznesforethics.orglblog, also provides
links that direct readers to other news articles and commentary on these issues. CREW's blog
had 2,280 hits in May.

Finally, CREW has published numerous reports to educate the public about government
ethics and corruption. Examples include: The Revolving Door, a comprehensive look into the
post-government activities of24 former members of President Bush's cabinet; 2008 Top Ten
Ethics Scandals; 2008 Most Embarrassing Re-Elected Members ofCongress; 2008 Most
Corrupt Members ofCongress; and Those Who Dared: 30 OffiCials Who Stood Up For Our
Country. These and all other CREW's reports are available at
http://www .citizensforethics.org/reports.

Based on these extensive publication activities, CREW qualifies for a fee waiver as a
"representative of the news media" under the FOIA and agency regulations.

4
 Request for Expedition

Pursuant to 5 U.S.C. § 552(a)(6)(E) and 31 C.F.R. § 1.5(e), CREW requests that

Treasury expedite the processing of this request in light of the urgency to inform the public
about the possible influences to which Treasury and the administration may have been subject
in formulating the financial regulation reform plan. In light of the financial crisis of the past
two years, these reforms are of critical importance tlO the public. As Secretary Geithner recently
told Congress, the reforms are intended "to lay the foundation for a safer, more stable financial
system; one that can deliver the benefits of market-driven financial innovation even as it guards
against the dangers of market-driven excess." See Treasury Secretary Tim Geithner's Opening
Statement before the U.S. Senate Banking Committee, June 18,2009. Congress has already
begun to hold hearings on the reforms, and more are scheduled for the near future. As
discussed above, Secretary Geithner and other senior Treasury officials met with numerous
financial industry lobbyists and executives, as well as representatives of representatives of
financial industry trade associations, consumer groups and labor unions, then altered the
original reform plan. The public should be afforded the opportunity to more fully understand
the influences that may have been exerted on Treasury and the administration, and to weigh in
with Congress and the administration as the legislatxve process moves forward. It is CREW's
hope that by disseminating the information sought in this FOIA request, the public will have
more effective voice. Furthermore, delay would compromise the public's significant interest in
this matter.

As explained above, CREW is a non-profit corporation engaged primarily in

disseminating information it gathers from a variety of sources, including the FOIA, and seeks
the information requested in this FOIA request for the express purpose of disseminating it to the
public. Further, as outlined above, CREW's website contains numerous examples of its efforts
in this regard. As with the Electronic Privacy Information Center and the ACLU, two
organizations the courts have found to satisfy the criteria necessary to qualify for expedition, I
CREW '''gathers information of potential interest to a segment of the public, used its editorial
skills to tum raw material into a distinct word, and distributes that work to an audience. ",
ACLU, 321 F. Supp. 2d at 30 n.5, quoting EPIC, 241 F. Supp. 2d at 11.

In sum, the public needs to know the extent to which financial industry lobbyists and
executives, consumer groups, and labor unions may have attempted to influence Treasury and
the administration in its formulation ofthe financial regulation reform plan. Accordingly,
CREW requests that this request be expedited.

In addition, the undersigned hereby certifies that the foregoing is true and correct to the
best of my knowledge and belief.

ISee ACLU v. U.S. Dep't of Justice, 321 F. Supp. 2d 24,30 (D.D.C. 2004); EPIC v. Dep't of
Defense, 241 F. Supp. 2d. 5, 11 (D.D.C. 2003).

5
 Conclusion

If you have any questions about this request or foresee problems in releasing fully the
requested records on an expedited basis, please call me at (202) 408-5565. Also, if CREW's
request for a fee waiver is not granted in full, please contact me immediately upon making such
a determination. Please send the requested documents to Adam J. Rappaport, Citizens for
Responsibility and Ethics in Washington, 1400 Eye Street, N.W., Suite 450, Washington, D.C.
20005.

Thank you for your attention to this matter.

Sincerely,
"
IJ --
,/'1(--,,- h/fJ
,?---.
Adam J. Rappaport
\'
I"

Senior Counsel
Citizens for Responsibility and Ethics in Washington

Enclosures

Obama Enlisted a Wide Consensus on Finance Rules - NYTimes.com http://www.nytimes.com/2009/06/ 17/business/ 17regulate.html?pagewa...

This copy is for your personal, noncommercial use only. You can order presentation-ready

copies for distribution to your colleagues, clients or customers here or use the "Reprints" tool
:;;,l.~:~nt:R ~R!H~n:..·" FC=,":!!-~A""
~,f,:,,,,~.DFiEJ !?''­
that appears next to any article. Visit www.nytreprints.com for samples and additional

information. Order a reprint of this article now.

June 17,2009

Obama Sought a Range of Views on Finance Rules

By STEPHEN LABATON

WASHINGTON - President Obama's plan to reshape financial regulation, which he will unveil on
Wednesday, is the product of weeks of meetings among government officials, financial experts, lawmakers,
industry executives and lobbyists, many of whom were invited to help the White House draft the proposal.

Mr. Obama told reporters on Tuesday that a "lack of oversight" allowed what he called "wild risk-taking."
He said it led to "very dangerous" conditions that imperiled the global economy.

But executives from an array of industries caught up in the financial crisis came to Washington over the last
several weeks to make their case for how the new regulatory landscape should look. They came from big
banks and small ones, insurance companies and stock exchanges, hedge funds and mutual funds, and were
joined by officials from consumer groups and big labor - often with conflicting views.

Now, lobbyists who lost the initial skirmish inside the administration will head to Congress to try to
influence the final product.

The plan the president will formally announce on Wednesday would give the Federal Reserve greater
supervisory authority over large financial institutions whose problems pose potential risks to the economic
system. It would separately expand the reach of the Federal Deposit Insurance Corporation to seize and
break up troubled financial institutions. And it would create a council of regulators, led by the Treasury
secretary, to fill in regulatory gaps.

In doing so, the plan seeks to give Washington the tools to police the shadow system of finance that has
grown up outside the government's purview, and to make it easier for regulators to head off problems at
large, troubled institutions or take control of them if they fail.

"Unfortunately the growth of the nonbank sector as well as all the complexities and financial instruments
outstripped those old regulatory regimes," Mr. Obama said in an interview on Tuesday with The New York
Times and CNBC.

Although it would strikingly reorganize the regulatory architecture, the president's plan results from many
compromises with industry executives and lawmakers, and is not as bold as some had hoped.

Mr. Obama seemed to acknowledge as much when he posed the question: "Did, you know, any
considerations of sort of politics play into it? We want to get this thing passed, and, you know, we think that
speed is important. We want to do it right. We want to do it carefully. But we don't want to tilt at
windmills."

lof3 6/30/2009 2: 18 PM
Obama Enlisted a Wide Consensus on Finance Rules - NYTimes.com http://www.nytimes.com/2009/06117/businessI17regulate.html?pagewa...

At the White House and the Treasury Department in recent weeks, some insurance companies sought a law
that would enable them to get a single federal charter instead of multiple state charters. The insurers lost.
Consumer groups argued against the banks in favor of a consumer financial protection agency with broad
new authority to protect homeowners from unsuitable loans. The consumer groups prevailed.

The mutual fund industry successfully argued against a proposal by some banks - which are competitors to
mutual funds - to give the Securities and Exchange Commission's authority over mutual funds to the new
consumer agency.

Hedge funds and dealers in derivatives sought to minimize the extent to which the government will intrude
into their businesses. They partly won; the administration will leave many of the details of that authority to
lawmakers and regulators. Savings and loan associations argued unsuccessfully against a proposal by the
administration to eliminate federal savings and loan charters, which have been subject to less regulation
than bank charters.

The administration, which has sought to reduce the corrosive influence of lobbying on policy making,
actually encouraged the tussle by inviting executives, academics, former officials and others to the series of
meetings overseen by the Treasury secretary, Timothy F. Geithner, and Lawrence H. Summers, the
president's top economic adviser. The meetings were often attended by their top aides: the deputy Treasury
secretary, Neal S. Wolin, and Diana Farrell, a deputy director of the National Economic Council at the
White House.

In the last two weeks alone, the administration has heard from top executives from Goldman Sachs,
MetLife, Allstate, .LPMorgan Chase, Credit Suisse, CitigrouQ, Barclays, !JBS, Deutsche Bank, Morgan
Stanley, Travelers, Prudential and Wells Fargo, among others. Administration officials also discussed the
president's plan with the top lobbyists at major financial trade associations in Washington.

The raucous process of overhauling a system that oversees the nation's most influential and affluent
corporate interests is not without precedent. In 1913, the year he signed the law creating the Federal
Reserve in response to an earlier market panic, President Woodrow Wilson lamented to a friend about
banking reform.

"There are almost as many judgments as there are men," Mr. Wilson said. "To form a single plan and a
single intention about it at times seems a task so various and so elusive that it is hard to keep one's heart
from failing."

President Obama's plan would not consolidate all the banking agencies into one, but it would take some of
the existing agencies' powers to oversee mortgages, credit cards and other kinds of consumer debt and give
them to a new regulator, tentatively called the Consumer Financial Protection Agency.

The president, however, will ask Congress to merge the Office of Thrift Supervision, the beleaguered agency
that missed problems at IndyMac, Washington Mutual and the American International GrouQ, into the
Office of the ComQtroller of the Currency. a Treasury unit that supervises the largest banks.

The plan would impose tighter rules on banks that package and sell securities that are backed by mortgages
and other debt. It would require that companies that issue mortgages retain at least 5 percent of them on

20f3 6/30/20092: 18 PM
Obama Enlisted a Wide Consensus on Finance Rules - NYTimes.com http://www.nytimes.com/2009/06/ l7/business/ 17regulate.html?pagewa...

their books to discourage companies from marketing unsuitable loans.

It would also require all advisers of hedge funds and private equity funds to register with the Securities and
Exchange Commission and open their books to regulators. And it would impose new conflict of interest
rules on the credit rating agencies.

The plan is largely the product of extensive conversations between senior administration officials and top
Democratic lawmakers - primarily Representative Barney Frank of Massachusetts and Senator
Christopher J. Dodd of Connecticut. The two lawmakers head the Congressional committees that will take
the first crack at drafting the legislation necessary to make the plan work.

John Harwood contributed reporting.

Copyright 2009 The New York Times Company

Privacy Policy I Terms of Service I Search I Corrections I RSS I first Look I ~ I Contact Us I Work for Us I Site M<lQ

30f3 6/30/2009 2: 18 PM
Core Reforms Held Firm As Much Else Fell Away http://www.washingtonpost.comlwp-dynicontentJarticle/2009/06/ 17/...

~
ftbt Wtl6l)ington Jlost
Core Reforms Held Firm As Much

Else Fell Away

In Triage Mode, Economic Team's Goal To Expand

Fed's Power Trumped Others

By David Cho and Zachary A. Goldfarb

Washington Post Staff Writers
Thursday, June 18, 2009

The plan President Obama unveiled yesterday to

overhaul the government's oversight of the fmancial
system was not the wholesale remaking of Washington
that the administration had initially envisioned.

As the proposal came under intense pressure this

spring, its chief architects held fIrm to a few reforms they deemed the most fundamental to averting
another fmancial crisis while giving ground on nearly everything else.

Time and again, lawmakers, regulators and industry lobbyists pressed their concerns behind closed doors
at the White House and the Treasury Department, according to participants.

Turf-conscious regulators opposed the idea to consolidate banking oversight agencies and took their
appeal over the Treasury directly to the White House. Ultimately the administration spared all but one
agency.

A few key lawmakers argued against merging the two federal agencies that oversee the stock and
commodity markets. That did not happen.

Insurance companies fought over whether a national regulator should oversee them. The White House
dropped the proposal.

But on those elements that mattered most to the administration, particularly expanding the powers of the
Federal Reserve, Obama's senior advisers were unyielding.

On May 8, lobbyists representing many ofthe nation's banks and hedge funds huddled with senior White
House advisers in the Roosevelt Room, seeking to snuff out an administration plan to increase the Fed's
authority to regulate them, when Treasury Secretary Timothy F. Geithner stuck his head in the door.

Fresh from meeting with Obama, Geithner asked the lobbyists what they were up to. When they
explained they preferred that a council of regulators, rather than the central bank, safeguard the fInancial
markets, Geithner silenced the discussion with a string of obscenities, according to people who were
present.

"I don't believe in rule by committee," he said.

Now as the plan moves to Capitol Hill, skeptics say it gives the Fed too much power. Others say it did

lof4 6/30/2009 2: 19 PM
Core Reforms Held Firm As Much Else Fell Away http://www.washingtonpost.com/wp-dyn/contentJarticle/2009/06/ 17/...

not go far enough to eliminate overlapping agencies. Some big fmancial fIrms complain that they were
cut out of the process.

Geithner and National Economic Council director Lawrence H. Summers, who forged the plan, did not
seek a consensus among all of these interest groups. Instead, Summers said, they focused on how to fIx
the regulatory system's root problems. Whether the solution called for the merger or elimination of
agencies was a secondary concern.

"We made a decision to focus on doing what is necessary to prevent future crises," Summers said in an
interview. "The test of whether this is going to be bold and far-reaching is going to be what happens in
practice in the fmancial industry not what happens to organizational charts in Washington."

Meetings on regulatory reform began a few weeks after the November election. At fIrst, Summers and
Geithner insisted that their team fully understand what factors had provoked the crisis rather than
address practical matters, such as which agencies would be eliminated and which would gain power,
according to participants in the sessions.

But it was clear to several ofthem that Geithner and Summers had long ago concluded the Fed should
take on a new, more powerful role that would allow it to probe any fIrm or market that could threaten
the fInancial system.

The group examined other possibilities, including creating a new agency to exercise the power, giving it
to an existing regulator or assigning the task to a council of regulators. But every idea, upon scrutiny,
was judged to have major flaws.

The separate issue of protecting consumers of mortgages and other fmancial products emerged as a
second priority at a meeting with Obama shortly after his inauguration. Treasury offIcials gave a
presentation about the growing complexity of the lending business. Obama referred to his own personal
experience of trying to understand the rules governing credit cards. He urged the group to take strong
action on consumer regulation, sources said.

As the weeks progressed, the group convened nearly every day, often meeting in Summers's offIce on
the second floor of the White House, where they raided his personal stash of Diet Cokes, or in the
Roosevelt Room.

By the end of February, a fIrst draft of the plan emerged. It included several radical proposals. The
oversight authority of the nation's four federal banking regulators would be merged into one agency. The
Securities and Exchange Commission and the Commodity Futures Trading Commission would be
combined.

Neither proposal would survive.

The proposal to create a unifIed banking regulator faced resistance from big and small banks, which are
overseen by a patchwork of federal and state agencies. Banks have been able to choose their own
regulator, often allowing them to seek the friendliest oversight. Establishing a single regulator would
threaten this arrangement.

In February, Camden R. Fine, chief executive of Independent Community Bankers of America, sat down
in Geithner's offIce days after he was sworn in, according to a person familiar with the meeting. Fine
warned Geithner against the idea of a single regulator, telling him that such a proposal would anger the
8,000 community banks ICBA represents. Fine cautioned him that "we would be totally opposed to

20f4 6/30/20092: 19 PM
Core Reforms Held Firm As Much Else Fell Away http://www.washingtonpost.com/wp-dynlcontent/article/2009/06/ 17/...

that," the source recalled.

Geithner didn't respond. He listened and took notes.

Such meetings with industry representatives were common, but senior administration officials said they
did not allow themselves to be unduly swayed by such concerns.

More influential were the voices of banking regulators, as well as the heads of fmancial committees in
Congress, some administration officials said.

Federal Deposit Insurance Corp. Chairman Sheila C. Bair said she spoke to the Treasury and then to the
White House about preserving her agency's role as a regulator of state-chartered banks, arguing that the
existing system of state charters was important for supporting community banks and that it had not
contributed to the financial crisis.

Obama's advisers said they chose to pick their spots and put their political weight behind only those
issues considered vital to the plan. These officials, for instance, said they were willing to scrap the idea
of a single banking regulator as long as they could achieve the same objective by crafting rules to impose
uniform oversight over all banks.

"We were leaning to the merger. Then we think: What kind of reaction are you going to get on the Hill?
What's the political blowback? And given the political blowback, is it essential to do it?" an
administration official said. "The substance underneath matters a heck of a lot more."

Problems in the insurance industry were deemed by officials to be peripheral to the fmancial crisis. So
while a federal regulator for insurance companies was suggested in the administration's first weeks, this
proposal was shelved after it confronted opposition from state governments, which now regulate the
industry, and widely diverging views from insurers.

At a June 4 meeting with insurance company representatives, White House and Treasury officials
opened by asking what kind of regulator they wanted, according to people present. The American
Council of Life Insurance said it wanted a federal regulator. The chief executive of the National
Association of Insurance Commissioners jumped in to say state regulators work best. Lobbyists for
property and casualty insurance companies argued against federal regulation.

Tbe arguments went round and round, with different people shouting one another down. Finally, an
administration official ended the gathering, telling participants: "Now you'll understand why we can't
make everyone happy."

Staff writers Binyamin Appelbaum and Brady Dennis contributed to this report.

View all comments that have been posted about this article.

Post a Comment

View all comments that have been posted about this article.

30f4 6/30/20092: 19 PM