He is not well known beyond Washington, but David Nason, the Treasury Department's assistant secretary for financial institutions, is playing a pivotal role as the government weighs an overhaul of financial regulation and clamping down on government-sponsored enterprises.
Mr. Nason, 37, consulted with supervisors, both here and abroad, industry executives, and lawmakers as the lead author of Treasury's blueprint for a sweeping regulatory restructuring, and he's been the detail guy as the department negotiated a key compromise that is moving GSE reform forward.
Mr. Nason began working on the Treasury's regulatory restructuring blueprint in March 2007 as part of an initiative to ensure the U.S. financial system remains globally competitive.
In October the department posed 30 questions and invited feedback. It got more than 350 responses from bankers, regulators, and competitors.
The Treasury proposal, unveiled March 31, breaks down goals into near-, medium-, and long-term. Separate agencies would perform three main functions: ensuring the safety or the financial system, guarding the safety and soundness of individual companies, and protecting consumer rights. The Treasury sacrificed some sacred cows such as state bank charters, and the plan was widely criticized as too overreaching.
Mr. Nason said the reaction is not surprising. "Change is difficult. The status quo is something people are comfortable with."
In the process of doing his job, Mr. Nason has earned a reputation as a realist who can bring people together and steers clear of the spotlight.
"He's not the kind of guy trying to grab headlines for himself, and I think he takes a lot of satisfaction in taking complex and difficult issues and finding solutions to them," said Kevin MacMillan, Bank of America Corp.'s assistant general counsel for regulatory and public policy, who worked with Mr. Nason at the Treasury.
Gov. Kevin Warsh of the Federal Reserve Board used the phrase "mini-policy think tank" to describe Mr. Nason.
"David is as pragmatic as he is principled," Mr. Warsh said. "When a problem needs to be addressed, he looks at it first in an unconstrained way — that is, he tries to ask, 'What's the right answer?' — but he doesn't stop there. He then asks, 'If I have a sense of the right answer, what is a feasible public policy outcome?' He has enough experience in Washington in various capacities to know what is in the realm of the possible, both in the short term and over the horizon."
They first worked with each other six years ago, when Mr. Warsh was at the White House and Mr. Nason was at the Securities and Exchange Commission.
Mr. Nason was a sixth-year associate focusing on securities and tax law at Covington & Burling LLP when SEC Commissioner Paul Atkins recruited him as an adviser. In 2005, after three years at the SEC, Mr. Nason made the move to the Treasury as a deputy assistant secretary. He was promoted in May 2007.
He reports to Under Secretary Robert Steel, who, along with Treasury Secretary Henry Paulson, joined the department in mid-2006 from Goldman Sachs Group.
Mr. Steel called Mr. Nason one of the department's most important advisers.
"He has never been one to seek much-deserved credit for all of the issues he covers for this department," Mr. Steel said.
Some the loudest criticism has been internal. The Office of Thrift Supervision is fighting the plan's recommendation that it be folded into another bureau of the Treasury, the Office of the Comptroller of the Currency.
In a speech last week, Mr. Nason took on the OTS. "Choosing a regulator for an insured depository should not be a fundamental business decision," he said. "The thrift charter is no longer necessary to ensure sufficient residential mortgage loan availability for U.S. consumers."
Mr. Nason also went after the OTS's role as a holding company supervisor, saying it "provides a set of different and less restrictive requirements" than the Fed.
With just seven months left in the Bush presidency, Mr. Nason knows Treasury's plan is a road map rather than a to-do list. But he says the turmoil in the housing markets has provided momentum for change.
"It wasn't the goal of the blueprint to respond to these current market events," he said. "Now things are probably going to move faster than we anticipated, because of the subprime situation" and the Fed's rescue of Bear Stearns Cos.
Tim Ryan, the chief executive of the Securities Industry and Financial Markets Association and a former OTS director, said, "He was working on this blueprint before the sky started falling in, and I give him credit and Paulson credit for taking a work product which was in development and making it relevant to a current situation, and the best example of that is the Fed's systemic powers."
Mr. Nason, a native of Providence, R.I., earned his undergraduate and law degrees at American University in Washington. His wife, Nicole, is also in the government; she runs the National Highway Traffic Safety Administration. They have three children, including one who was born just a month before the blueprint was released.
"People ask me which birth was more painful, and I say 'To me, that was,' " Mr. Nason said, pointing to the blueprint.
Pressing some of its near-term goals, he is heading efforts to form the Mortgage Origination Commission, which would evaluate each state's system for licensing and regulating mortgage originators, and working with the Fed and the SEC on rules to govern investment banks' access to the discount window. He's also working on the executive order that would add the OCC, the OTS, and the Federal Deposit Insurance Corp. to the President's Working Group on Financial Markets. He expects that order to be finalized by yearend.
Mr. Nason's other major project is tightening oversight of Fannie Mae and Freddie Mac. The long-debated legislation got a boost last month when it passed the Senate Banking Committee on a 19-2 vote, and he is upbeat about its prospects for enactment this year.
"I'm not saying it will [happen], but we're close," he said.
The bill would divert some of the GSEs' profits to a refinancing program designed to help people struggling to make their mortgage payments avoid foreclosure. These homeowners would get new loans insured by the Federal Housing Administration; the White House supports GSE reform but has objected to the FHA provisions, calling them a bailout of irresponsible lenders and borrowers.
"It complicates things, because if the GSE piece is a stand-alone, then our support is unconditional," Mr. Nason said. "Tied to the FHA, it adds concerns, and it complicates things. That doesn't mean that I don't think that we can get there. It just makes the calculus harder."
A former boss, SEC Commissioner Paul Atkins, praised Mr. Nason's negotiating skills.
"He can step into a room of people who otherwise don't want to talk to one another and get them to talking," Mr. Atkins said. "He is indefatigable. … On the GSEs, you have lots of ideology of law and finance and history all mixed together, so that's a potent brew to try to deal with."
