The Commodity Futures Trading Commission (CFTC) may have appointed all the industry reps it needs to its data standards subcommittee (see my earlier blog on which here), but the Treasury’s Office of Financial Research (OFR) continues to lag in the appointment process – not least of which is the selection of a director. The agency’s stated intention has been to get everyone in place by September, but there may be a strong political reason for holding off in appointing someone to fill the top slot.
Former Morgan Stanley chief economist Richard Berner, who bagged Lew Alexander’s old job at the Treasury earlier this year and is thus acting as an advisor to the OFR (see our coverage here), stated publicly this week that the Treasury has determined the appointment process for the OFR’s 60-strong team and its director to be an “extremely high priority” over the coming months. However, no official timeline or details of the appointment process have been revealed (nor any justification of the delay).
But is this delay and reticence to speak publicly about the appointment process down to political concerns at the top? After all, it has been written into law that the OFR will act as an independent agency and the director will therefore have the ultimate say in resource allocation and focus. The director will be in place (once appointed) for a three year term and once someone’s in, it might be hard to get them out. All important things to consider when granting a new autonomous body (and figurehead) power…
Moreover, the requirement for the presidential appointment of the director puts pressure on an already beleaguered executive that has been fighting the industry over many of the details of Dodd Frank over the last year or so (see my blog on the rocky start down this appointment road back in August last year here). Opting to grant money and power to a new body might also not go down too well with the incumbent regulators.
Back in February, I chatted to Shaun Brady, principal at not for profit advisory firm to the US government Mitre Corporation, and he noted that the appointment of the right individual would be key to the success of the OFR (see my blog on which here). But is the government holding off due to concerns over the power that this individual may wield? Are those at the top having a change of heart?
I’ve previously questioned the motives of the US government for going down the OFR route in the first place (see my blog on which here), noting possible tax related interests, but are these interests or any others strong enough to ensure the future of the Treasury agency?
Republican sentiment towards the OFR has also been negative since its inception. Some have been particularly vocal about their perception of the new agency as a waste of time and money – see US Republican senator Richard Shelby’s comments last year, for example (see here), or the discussions during the early Congress debate on the subject (see comments from politicians such as Republican senator for Texas Jeb Hensarling on the subject here).
Last year, Hensarling referred to the OFR as a new “legion of government bureaucrats” with too much power that could pose a threat to privacy due to misuse of data or data breaches. Democrat senator Susan Garrett called it “Big Brother on steroids”. Who knows, this sentiment may be filtering its way through the political system, given that power has changed hands and regulatory staff is being refreshed throughout?
If an appointment does get made, will the OFR last the distance?