Newswise — Media reports of secretly taped conversations between federal regulators and Wall Street bankers at the New York Federal Reserve suggest ‘regulator deference’ to the big banks. Robert C. Hockett, a Professor of Law at Cornell University and Fellow of The Century Foundation who has done regular consulting work for the New York Fed and other governmental departments, says that the secret recordings do not of themselves confirm suspicions that bank-regulatory agencies are ‘captured.’

Hockett says:

“Secret recordings of New York Fed bank examinations broadcast this weekend will likely appear to confirm the suspicions of some that bank-regulatory agencies are 'captured.' Before leaping all the way forward to any such conclusion, however, we would do well to remember that no agency is reducible to a mere two or three of its agents.

“Some Fed bank examiners do fear 'rocking the boat,' to be sure, but others are much less deferential than those whom we hear in the secret recordings. And the institution as a whole has made great strides in ending that 'groupthink' which it itself determined, in its post-2008 soul-searching, to have led it to miss what was brewing before 2008. “The Fed clearly has farther to go in its project of self-improvement, then, but it would be a mistake to suppose that it hasn't already gone far.”

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