Harvey Rosenblum always stood out among his peers a regulator who knew his mind and wasn't afraid to tell you what was on it.
Over the past decade, the director of research at the Federal Reserve Bank of Dallas cultivated the most public profile among rank-and-file regulators in the "too big to fail debate.
Rosenblum retired recently after nearly 43 years with the Federal Reserve System, and in an interview this week, he let loose on everything from the next Fed chairman to Dodd-Frank's implementation to community banking and of course his favorite topic how to tame "too big to fail. His thoughts on that have evolved and might surprise you.
In the interview, Rosenblum, 70, tried hard to avoid naming names, but when it comes to the race for Fed chairman, we all know who he is talking about.
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"If you give me my choice for Fed chairman, I think what the Fed needs right now is not an economist at the top, but a CEO, Rosenblum says. "We don't have a shortage of brilliant economic thinking (at the Fed). What we have a shortage of is CEO-type leaders who can hone an agenda, drive a staff in a particular direction and know when to quit and know when to play.
Fed Vice Chair Janet Yellen is President Obama's pick for the post, but Rosenblum's choice is his former boss, Dallas Fed President Richard Fisher.
"Richard is a Democrat who is loved by Republicans and we need someone like that at the top of the Fed right now, he says. "Someone who understands economics, but who can make a 20,000-person organization really run.
Yanked back to reality, Rosenblum is asked if he thinks Yellen will be confirmed by the Senate. "With difficulty, but I think she will, he says.
Rosenblum is living proof that you can devote yourself to an organization for four decades and still see its warts. He deplores the implementation of Dodd-Frank. (Let's be clear, he deplores Dodd-Frank, too.) He thinks the Fed is writing bloated rules that won't accomplish much. That naturally leads to questions about Gov. Dan Tarullo, who has been leading the Fed's effort.
"I don't blame Dan Tarullo, Rosenblum says. "He inherited a difficult situation and never had the clout to get done what he really wanted done.
"He was swimming against the tide in Washington.
Why the use of the past tense? Does Rosenblum think Tarullo is leaving the Fed?
"I am not sure who is going to be left at the Fed next year but I will say there is going to be wholesale turnover, Rosenblum says. "I can easily picture having only two or three sitting governors.
There has been a sea of speculation over why the White House never nominated Tarullo as Fed vice chair for supervision, a position created in Dodd-Frank and a role he has been fulfilling since its enactment in 2010.
I asked Rosenblum if he thought either of the two other current governors should get the nod. Fed Gov. Jay Powell's term is up in January, but he could be reappointed.
"Powell has a great disposition, Rosenblum says. "He's very evenhanded, level-headed. I could go on and on and on with praise for Mr. Powell. He and I disagree very strongly on how Dodd-Frank ought to be handled, but I think if he found himself in the seat of power he might listen more closely to alternative points of view.
And Fed Gov. Jeremy Stein?
"I think he also could be great at that job but I have a feeling he's facing a tenure decision at Harvard Business School, and my guess is he's going to go back to Harvard.
Rosenblum says he'd love to see fellow Fed alum and "too big to fail critic Tom Hoenig nominated as Fed vice chair for supervision.
"I'd give him a 12 on a 1-to-10 scale, says Rosenblum of the current FDIC vice chair. "I think it would be wonderful to see him in a more influential position.
Rosenblum says it is not too late for federal regulators to hit a reset button on Dodd-Frank's implementation.
"Let's show some leadership and figure what must be done next and get a timetable and direct the staff to get it done, he says. Comptroller of the Currency "Curry wants to do a decent job. The leadership of the FDIC really wants to keep moving. Even though it's a couple years too late it can still get done.
So what steps would Rosenblum take?
"We need to settle on some meaningful capital-to-asset ratios including off-balance-sheet assets and we need to get there it in a hurry, he says. "2019 and 2020 are not the right answer. I'm not even sure we can wait until 2016.
U.S. regulators proposed a tougher leverage ratio this summer and while Rosenblum views that as a step in the right direction he says the U.S. is not setting the standard high enough.
"Somebody has to be the exemplar. I think the United States has to be the exemplar. We are the largest economy in the world. We're one of the healthier ones and I think the tone has to come from here on liquidity, capital, on stress testing and a decision tree.
By "decision tree Rosenblum means making it more clear who gets what when a bank fails.
"Nobody knows how the next crisis would be handled and that's an accident waiting to happen, he says. "The FDIC, with the help of the Fed, needs to put out a decision tree of how they would handle a large financial institution in the next crisis.
Rosenblum advocates simulations run by the government and witnessed by outsiders that would show what would happen in a failure.
"Like first responders, regulators would practice, practice, practice until they get their techniques down pat, he says, likening it to the simulation sponsored by The Clearing House late last year.
"That was a brilliant idea, but they wrote the press release before they did the simulation," Rosenblum says. "They wanted to be able to tell the American people that it worked.
Rosenblum says the simulation he envisions would be more open and less scripted. Regulators would conduct these simulations annually or every six months.
"From that they could come up with a decision tree that would be made available to everybody in the private sector who is trying to figure out where to hold their investments.
Rosenblum is big on transparency. He thinks the Fed ought to be more open about the models it uses when it stress tests the largest banks. He'd also like to add an "o" for opacity to Camels ratings (O'Camels or Camelos?) and make that part of the rating public.
A company deemed overly opaque would get downgraded. "We need to have that as part of the ratings system and maybe some parts of the ratings system can be made public. That would reinforce the incentives to reduce complexity.
Rosenblum says the Fed should extend its drive for greater transparency in monetary policy to supervision.
"The Fed has put enormous resources into better communication on monetary policy. I'm not saying they are doing a great job on it, but they are trying and at least going in the right direction.
"With supervision and regulation, there is practically nothing.
On "too big to fail, Rosenblum is more bullish than you might expect.
"I don't want a major new law to dismantle the systemically important banks, he says. "I don't want regulations that are going to keep gobbling up forests.
Rather he'd like federal regulators to keep leaning on the biggest banks to shrink and streamline themselves.
"They have really started to reorganize themselves in meaningful ways, but it is still going slowly, he says. "Let's speed up this restructuring that is already under way by continuing to put the pressure on and encouraging the management to spin off units that are clearly not core, redraw these lines and keep downsizing.
"We need to put enough taxes on them to force them to keep going in that direction.
Rosenblum has little confidence that Dodd-Frank's Orderly Liquidation Authority will work in practice.
"If it were just one institution, the irony is that it could work, he says. "The problem is that rarely do these things happen in isolation.
If the financial system faltered, Rosenblum predicts policy leaders would get out their bailout buckets.
"They would get together in a room and they say, Who wants it on our conscience and written in the history books that we allowed Great Depression 3.0 to happen? What can we do within the legal means to make sure that the financial sector does not unwind and freeze the economy and bring us back to some version of 2008?' "
Rosenblum doesn't have a definitive number for how big is too big, but he says $50 billion the size designated in Dodd-Frank is too small.
"$250 billion is where you start to think about the dividing line, he says. "Over $250 billion, you're not really subject to meaningful outside influence from the regulators, shareholders or creditors.
But size is just one factor; complexity and geographic reach must be considered as well, he says. And the number can't be set in stone.
"Where you draw the line in 2013 may be very different from where you draw the line a couple years from now, he says. "If we had more reinforcement by market forces, we might be able to draw the line somewhere else.
Looking to the other end of the size spectrum, Rosenblum is worried about community banking's future.
"The business model of community banking is being threatened by compliance costs, he says. "There are a lot of regulators who think the community bank model is one whose time has passed, as being too much -- from a regulatory point of view -- to manage.
Rosenblum says the economy needs "diversity in the size and orientation of our financial institutions.
He suspects his home-state congressman, Rep. Jeb Hensarling, will tackle "too big to fail during his tenure as House Financial Services Committee chairman, in part because community banks are pushing for it.
"His support is not going to come from the giant banks. It's going to come from the community banks, Rosenblum says. TBTF "is something that is up at the forefront of his mind. That's one way that he can differentiate himself from other people running for office in 2014 and then 2016. And in Texas if you can show a little bit of the libertarian instincts it's a good way to differentiate yourself.
Rosenblum says he left the Dallas Fed simply because "at some point you want to start concentrating on a few other things.
Alongside his Fed career, Rosenblum has been a professor, first at DePaul University when he was at the Chicago Fed, and then at Southern Methodist University in Dallas, where he has taught for 26 years.
"There is actually less freedom in academia than there is in the Fed, he says. "You have to remember universities are endowed by their wealthy graduates, including those who made their money at large financial institutions.
"Every once in a while I've actually taught classes at SMU in what's labeled the Bank of America' classroom. It doesn't alter what I say.