Should U.S. banking regulators "serve the banks" or act as "restraints" on bank speculation?
The contrast between the two views is stark, and the answer may seem obvious to some. Yet it's clearly a sore subject of genuine disagreement between two high-profile politicians: Rep. Spencer Bachus, R-Ala., and Rep. Barney Frank, D-Mass., who happen to be the ranking members on the House Financial Services Committee.
The kerfuffle between the two Congressmen started with a blog post, "Spencer Bachus finally gets his chairmanship," by reporter Mary Orndorff for The Birmingham News.
In the story, Bachus is quoted as having said, "In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks." The story added that Bachus later "clarified his comment to say that regulators should set the parameters in which banks operate but not micromanage them."
Frank wasn't slow to issue a statement of his own, in which he described Bachus' views of the relationship between regulators and banks as "seriously flawed."
"His view of the role of regulation, expressed before he 'clarified' his genuine belief, explains why he is so opposed to an independent consumer financial protection bureau, and why he wants to weaken restraints on speculation by banks with depositors' money," Frank stated.
It's tempting to dismiss Bachus' quote as an offhand gaffe and his "clarification" as a perhaps ill-considered effort to undo his error. It's equally tempting to dismiss Frank's rebuttal as sour grapes since he's about to hand over his committee gavel to Bachus. And it's tempting as well to dismiss the whole silly mess as grandstanding on both sides.
But still, the comments do illustrate a basic difference of philosophy about the proper purpose of government regulation in the banking sector. And it's a difference that undoubtedly will dominate the debate in the committee next year, which means it's an important issue for banking customers.
So, who's right: Bachus or Barney? And why?