In November of 2009, Charles Taylor, director of the Pew Financial Reform Project, wrote a letter to the editor of Financial Times advocating higher capital requirements for banks.
Even as some in Washington warned that raising reserves would hamper lending, Taylor argued that his group's research indicated raising capital requirements from 6% to 10% would bump up the price of loans only 0.2%. Congress and the Obama administration, he said, should be "confident that banks can move to a new capital regime."
Meet the Office of the Comptroller of the Currency's (OCC) new deputy head of capital and regulatory policy.
Named to the post earlier this month, Taylor, a British native, is a well-regarded hire with a long resume listing the Risk Management Association and the Depository Trust and Clearing Corp. among his former employers. Taylor has made few public statements about his own policy preferences, but he's also coming most recently from an organization that associated with advocating activist regulation of the sort that the OCC has vigorously fought.
Taylor did not respond to a request for comment made through Pew. His hiring was seen by some observers as an indication that the OCC is, at the very least, trying to minimize conflict with would-be financial reformers.
Taylor "is really open and respectful of different points of view and can understand the other side" of financial policy disputes "in a way that others can't," says Phillip Swagel, a University of Maryland professor of international economic policy and an American Enterprise Institute scholar who did research with the Financial Reform Project.
By Swagel's reckoning, Pew's Financial Reform Project was often philosophically in keeping with FDIC Chairman Sheila Bair, who frequently tangled with the OCC before she resigned in June and joined the Pew Foundation as an advisor.
The OCC, meanwhile, has argued that an overreaction to the 2008 financial crisis threatens the global economy. Anything more than a "modest" increase in capital requirements would be a mistake, Acting Comptroller John Walsh warned in June. The Obama administration has nominated former Massachusetts state banking regulator Thomas Curry to replace Walsh.
The characterization of the OCC as laissez-faire and Pew's Financial Reform Project as favoring greater regulation draws complaints from both organizations.
"The OCC was created to be independent and nonpartisan," says an OCC spokesman, dismissing the suggestion that ideology ever would play a role in its hiring decisions. The agency considers itself fortunate to have brought on someone with Taylor's experience, the spokesman said, noting that Taylor once worked as the director of the Group of 30, a position held at a different point by the acting comptroller.
Pew, meanwhile, dismisses the notion that its Financial Reform Project played a partisan role in banking policy debates.
"We were and are very careful about not making specific recommendations," says Gordon McDonald, project manager for the Pew Charitable Trusts who oversaw the creation of the Financial Reform Project. The effort, which will wind down next month after a two-year run, has been geared at facilitating debate, promoting policy transparency and providing "fact-based nonpartisan research analysis," he says.
Pew colleagues say Taylor is likely to prove an excellent addition to the OCC staff. Taylor never tried to put a strong personal stamp on the Financial Reform Project's policy recommendations, says Douglas Elliott, a scholar at the Brookings Institution who wrote key parts of the Financial Reform Project's research on capital levels.
"There were strong personalities on that task force, and he worked meticulously to draw forth a consensus," Elliott says. "The level of agreement he got was amazing."
Swagel at the University of Maryland says that as a supporter of the OCC's current approach to regulation, he would hate to see it give ground to placate reform activists. Taylor's hiring could be read as a signal that the OCC was looking to dial back such tensions modestly without abandoning its own policy positions, Swagel adds.
"I could have imagined far worse possibilities" given the pressure the OCC is under, Swagel says. "Somebody from the Center for Responsible Lending. Someone who really has an agenda and is an advocate."
