By Pam Martens and Russ Martens: May 4, 2017
For the past three decades, Thomas J. Curry has been a public servant, specializing in bank supervision. Most recently, Curry served as head of the Office of the Comptroller of the Currency (OCC), the regulator of national banks – which oversees some of the biggest banks in the U.S.
Yesterday, the Trump administration announced that Curry would be replaced with Keith Noreika, who will serve as Acting Director of the OCC until the U.S. Senate confirms a permanent new head. Noreika’s history has been that of a bank lawyer for two decades.
Noreika has been with the corporate law firm Simpson Thacher & Bartlett LLP for the past 10 months. Prior to that, however, he spent almost 18 years at Covington & Burling, the law firm where the top dogs in Obama’s Justice Department sprang from. Those top dogs, including U.S. Attorney General Eric Holder, failed to prosecute one top executive of any Wall Street bank for their role in the 2008-2010 financial collapse, despite mountains of evidence of serial frauds at the banks.
Equally noteworthy, Covington & Burling has a history of its law partners moving into the top slot at the OCC. John Dugan, a former bank lobbyist who has returned to Covington to chair its Financial Institutions Group, headed the OCC from 2005 to 2010 – the critical period leading up to and including the subprime mortgage meltdown, fraudulent foreclosures, robo-signing, the rigged peddling of mortgage-backed securitizations and the largest taxpayer bailout of banks in U.S. history.
Prior to Dugan, another Covington & Burling partner, Eugene Ludwig, was appointed by President Bill Clinton to head the OCC from 1993 to 1998. That was the period leading up to the repeal of the Glass-Steagall Act in 1999. As a result of that repeal, commercial banks were allowed to merge with Wall Street investment banks, creating today’s Frankenbank era of “too-big-to-fail.”
Ludwig had joined other Wall Street sycophants in the Clinton administration (like Robert Rubin and Larry Summers) to champion the deregulation of Wall Street. Ludwig testified as follows before the House of Representatives on March 5, 1997 concerning the subsidy enjoyed by FDIC insured commercial banks:
“…we should not let an unsupported hypothesis that banks enjoy a subsidy dissuade us from pursuing financial modernization. And we should not let an unsupported hypothesis dissuade us from adhering to a fundamental principle that should underlie modernization: Financial institutions need the freedom to manage their activities and structure their operations in a way that best suits their needs and the needs of their customers. Allowing these institutions to engage in new activities on the one hand but imposing an artificial structure on the other will impede rather than promote safety and soundness. It will not limit any more effectively their use of the alleged subsidy, even if the subsidy actually existed. And it will impose substantial costs and inefficiencies on the financial services industry that limit the industry’s ability to prosper, to serve America’s consumers and communities, and to compete in the global marketplace.”
The good news is that there is growing awareness among the American people that regardless of who is occupying the Oval Office, Wall Street continues to have an outsized, and dangerous, influence and that has to change before any meaningful reform can take root.