Tag Archives: ed gray

Why Did George Kaufman, the Father of “Prompt Corrective Action” (PCA), Hate Ed Gray so Much that He Opposed Gray’s Embrace of PCA?

By William K. Black

This is the second installment of a series arising from my recent participation in CIFA’s XIIth Annual International Forum in Monaco.  The series was prompted by Dr. Hans Geiger’s rage at financial regulation in Europe – not at its pathetic weakness that produced the criminogenic environments through much of the Eurozone, but at the proposal that Swiss banks be required to make criminal referrals when they found evidence of likely criminality by their customers.  This inspired me to wonder why a requirement that has existed in the U.S. for over 30 years would lead to such raw animus against “bureaucrats” serving “big brother” (i.e., the democratically elected Swiss government).

Geiger is a member of the European Shadow Financial Regulation Commission, which I will call the “EU Shadow” for the sake of brevity.  I am familiar with the US Shadow.  There are interesting (if you are a fellow wonk) articles by members of the EU Shadow about its creation and its conception of what it intends to achieve and how it will do so.  I will refer to the 2004 article by the EU Shadow’s chairman, Harald A. Benink.

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We Were Regulators Once: Ed Gray’s Finest Hour

By William K. Black
(Cross-posted from Benzinga)

On April 2, 1987, four U.S. Senators met secretly with Federal Home Loan Bank Board (Bank Board) Chairman Edwin J. Gray in the offices of Senator DeConcini (D.AZ).  Senator Donald Riegle (D. MI) was a surprise no-show.  DeConcini was joined by Alan Cranston (D. CA), John Glenn (D. OH), and John McCain (R. AZ).  Keating hired Alan Greenspan as a lobbyist to help recruit the Keating Five.  The Senators held the meeting at the request of Charles Keating, who controlled Lincoln Savings (a California chartered S&L).  Lincoln Savings would become the mostexpensive failure of the S&L debacle due to Keating’s political cronies and Keating became the most infamous S&L fraud.  A week later, on April 9, all five Senators met with four of Lincoln Savings’ senior regulators.  I took the detailed notes of that meeting.  The Senators became infamous as “the Keating Five.”  A quarter-century later, few remember what the meetings involved.

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