David Zaring discusses at RegBlog:
One question posed by the recent financial crisis was whether our confusing and disaggregated approach to financial regulation in the United States was to blame for the downturn. Did our regulators fail to identify weaknesses in the financial intermediaries they oversaw that they should have seen?
Dain Donelson and I attempted to answer part of this question by studying the performance of the Office of Thrift Supervision (OTS) during the crisis. OTS was the smallest federal banking regulator, the one most criticized by Congress for its performance, and the only agency sanctioned in the Dodd-Frank Act: it was eliminated, and its functions were moved elsewhere in the Treasury Department. Our research examined a particularly disparaging criticism of OTS: did this agency offer banks soft touch regulation as a way of competing for supervision fees against more rigorous regulators?
We did not find much evidence in support of this oft-proffered view.
Read the whole thing here.