A model for starting the new consumer bureau: The SEC
Whoever leads the new Bureau of Consumer Financial Protection will need some formidable management and leadership skills. Tim Duncan, chairman of the group American Business Leaders for Financial Reform, offers some commandments on what to do ("Honor Thy Fellow Agencies") and what not to do ("Thou Shalt Not Worship Consultants").
Thankfully, there's a good historical model for starting a new regulatory bureau right: the SEC.
From the report (pdf), published by the Cambridge Winter Center for Financial Institutions Policy:
The creation of new federal bureaucracies is not the stuff from which legends are made, but the first 431 days of the Securities and Exchange Commission (SEC) under its inaugural Chairman, Joseph P. Kennedy, probably comes closest. The SEC was created by the Securities Exchange Act on June 6th, 1934 and President Franklin Roosevelt appointed Kennedy as the first Chairman before the end of the same month.
The SEC began with an annual budget of only $300,000. Nevertheless, by the end of its first year of operations Kennedy was able to claim that the agency had investigated thousands of potential fraudsters, put an end to a series of serious frauds, and had referred criminal complaints to the Department of Justice. The agency issued dozens of new regulations and forced every stock exchange in the country to register and disclose previously secret information. Strikingly, the SEC shuttered five exchanges it determined were not cooperating.
Only 431 days into his five-year term, Kennedy resigned from the agency. He explained his early departure by describing himself as a builder -- not an administrator. (In fact, he had his sights set on other opportunities in the Roosevelt Administration).
Compared to the scope of the SEC's reach a few years later, its achievements under Kennedy were in fact fairly limited. But Kennedy's name recognition going in, his willingness to prioritize, and his ability to sense what would play well with the public enabled him to quickly create broadbased support for the agency and establish a reputation for professionalism that drew top-tier employees to the agency for decades.
Jia Lynn Yang
July 16, 2010; 6:20 PM ET
Categories: Financial regulation
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