WASHINGTON– The presence of strong state regulators will help the federal government do an even better job of implementing the new financial overhaul law, New York State Banking Superintendent Richard Neiman said today.
"State regulators provide checks and balances to the federal government and provide more cops on the beat. The relationship between state regulators and the new Bureau of Consumer Financial Protection will be the true test of cooperative federalism," Neiman said in a luncheon speech at a meeting of Women in Housing & Finance.
He praised the financial overhaul bill, which created the new consumer bureau to be housed in the Federal Reserve, for being a reaffirmation of a dual banking regulatory system.
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Neiman, who has held his post since 2007, noted that some state regulators had seen the seeds of the subprime mortgage crisis 10 years ago but were forced to stand down because of preemption.
He said one area where the new consumer bureau should establish national standards is mortgage loan servicing, including uniform reporting requirements.
Neiman, a member of the congressional panel that has monitored the effectiveness of federal efforts to rescue the financial system and help consumers, said the verdict on their effectiveness is mixed.
"TARP (the Troubled Asset Relief Program) did a great deal to prevent the financial crisis from getting worse than it was. But its shortcomings were in not doing enough to ensure that financial institutions lent more money and in not doing more to prevent foreclosures," Neiman said.
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