An Exploration of Effectiveness in the Regulation of Federal Depository Institutions, 1989-2008: Striving for Balance

by Mike Potter

Overview

Financial services regulators are tasked with balancing the conflicting roles of empowering and policing their regulated communities. In order to be effective, agencies must be able to accomplish both tasks. This analysis examines several determinants of effectiveness among U.S. bank regulators. Using statistical and narrative analyses, it examines factors that have contributed to the regulatory effectiveness of the National Credit Union Administration, Office of the Comptroller of the Currency, and Office of Thrift Supervision. The study focused on the relationships between regulatory ability to prevent failures and influences including agency longevity, ability to manage complexity, appointee and staff qualities, mission stability, regulatory style, and resources. Agency longevity and resources had the greatest impact on effectiveness among the cases that were examined. Additionally, this study proposes a typology that suggests that more effective regulators are able to balance information from their regulated communities with a public interest orientation. This allows them to have current information regarding emerging regulatory issues but also to avoid becoming too reliant on their supervised institutions for information. By not being overly reliant or out of touch with their regulated communities, agency can better foster regulatory resiliency.

Product Details

ISBN-13:	9780739179352
Publisher:	Lexington Books
Publication date:	09/19/2013
Pages:	144
Product dimensions:	6.10(w) x 9.00(h) x 0.70(d)

About the Author

Mike Potter is assistant professor at Appalachian State University. He worked for the West Virginia State Legislature and the American Bankers Association. He holds a Ph.D. in Public Administration and Public Affairs from the Center for Public Administration and Policy at Virginia Tech. He has published articles in Administration & Society. His research interests include ethics and financial services policy.

Table of Contents

Chapter 1: Introduction Statement of the Problem Figure 1.1: Total Assets Under Supervision, 1998 through 2008 Figure 1.2: Mentions in the Congressional Committee Reports by Agency, 1995 through 2008 Research Question Regulatory Effectiveness Figure 1.3: Failure Rates Expressed as Percentage of Regulated Institutions by Agency, 1998 through 2008 Understanding Bank Failure: The Case of Superior Bank Agency Relationships with their Regulated Communities Figure 1.4 Ideal Regulatory Agency Policymaking Understanding Self-funding and Charter Competition Overview of Study Chapter 2: The Challenge of Distilling and Examining a Theory of Regulatory Effectiveness Table 2.1: Selected Scholarship on Regulatory Effectiveness Working Model of Regulatory Effectiveness Figure 2.1: Working Model of Regulatory Effectiveness Regulatory Effectiveness Propositions Study Design Table 2.2: Agency Comparison The Agencies National Credit Union Administration Office of Thrift Supervision Office of the Comptroller of the Currency Other Regulators Operationalizations, Data, and Data Analysis Table 2.3: Empirical Examination: Concepts, Variables, and Data Sources Chapter 3: The Impact of Agency Longevity on Financial Services Regulatory Effectiveness Table 3.1: Relationships Between Longevity and Financial Resources by Agency Overview of the Statistical Models Agency Longevity and Failures Table 3.2: Impact of Agency Age on Failures of Regulated Institutions Conclusion Chapter 4: The Impact of Ability to Manage Political Complexity, Front-line Employees, and Political Appointee Turnover on Regulatory Effectiveness Congressional Attention and Front-line Staff Table 4.1: Impact of Congressional Attention and Percentage of Examiners on the Failures of Regulatory Institutions Congressional Attention Figure 4.1: Congressional Testimony by Agency, 1999 through 2008 Table 4.2: Relationships Between Congressional Attention and Effectiveness Front-line Staff Figure 4.2: Percentages of Examiners by Agency, 1998 through 2008 Table 4.3: Ratios of Examiners per Regulated Institutions by Agency, 1998 to 2008 A Narrative Analysis of Political Appointee Turnover Table 4.4: NCUA Political Appointees, 1989 through 2008 Table 4.5: OTS Political Appointees, 1989 through 2008 Table 4.6: OCC Political Appointees, 1989 through 2008 Figure 4.3: Number of Changes in Political Appointees by Agency, 1989 through 2008 Table 4.7: Relationships between Political Turnover and Effectiveness by Agency Conclusion Chapter 5: Impact of Mission Stability, Regulatory Style, and Financial Resources on Regulatory Effectiveness Mission Stability NCUA OTS Figure 5.1: Mentions in the Congressional Record by Agency, 1989 through 2008 OCC Figure 5.2: Number of Changes in Mission by Agency, 1989 through 2008 Table 5.1: Mission Changes and Regulatory Effectiveness Regulatory Style Non-legal Interventions Legal Interventions Figure 5.3: Annual Legal Intervention Percentage by Agency, 1998 through 2008 Figure 5.4: Enforcement Rates as Percentages of Regulated Institutions by Agency, 1998 through 2008 Resources Figure 5.5: Budgets by Agency, 1995 through 2008 (in $2011) Figure 5.6: OCC, OTS, and NCUA Budget per Institution Regulated (in $2011) Table 5.2: Relationships Between Resources and Effectiveness Table 5.3: Impact of Mission Stability, Regulatory Style and Resources on Regulated Institutions General Discussion of Findings Conclusion Chapter 6: Conclusions Summary of Key Findings Figure 6.1 Revised Working Model of Regulatory Effectiveness Normative Reflections Figure 6.2: Regulatory Agency Policymaking Future Research Conclusions References