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Deutsche Bank has hired the former president of the Clearing House Association to take charge of its stress testing process.
May 12 -
Paul Saltzman, the head of The Clearing House Association who helped to significantly raise the trade group's profile in recent years, is stepping down to pursue other opportunities, the group said Thursday.
March 26 -
The Clearing House spent 10 months and $2 million to plan a simulation of a large bank failure — and the results are not only fascinating, they're exemplary.
December 19
WASHINGTON – Gregory Baer, the head of regulatory policy for JPMorgan Chase, will be the next president of The Clearing House Association, the group announced Friday.
Baer is very well known in banking and policymaking circles, having served as a top Treasury Department official during the Clinton administration as well as having worked at the Federal Reserve Board and Bank of America. He is set on Oct. 5 to take the reins of the Clearing House Association, which lobbies on behalf of the 24 largest commercial banks, and serve as general counsel and executive vice president of The Clearing House Payments Co., the group's payments center.
In an interview, Baer said the overarching policy challenge facing the industry remains the reputational damage done to it by the financial crisis.
"The great challenge is to rebuild our credibility, both with the public and with policymakers," he said.
But he also said the industry has to pay close attention to new technologies, such as digital currencies, that are changing the system.
"Another important challenge is in payments and currencies, which has always been the core of banking and which are now in play both as a business and as a policy matter," Baer said.
Baer said his experience working for JPMorgan and B of A gives him an added perspective that will help in the new job.
"The largest misconception about regulation – in particular capital and liquidity regulation -- is that it is agnostic among banking products or businesses. That is, banks either accept a lower return on equity or pass along the cost to their customers, but remain in the same business," he said. "Having seen how banks actually work, I understand that regulation changes bank behavior. To some extent, we are seeing this play out in the current debate about market liquidity."
Overall, he said policymaking has changed significantly in recent years.
"There's been something of a sea change in regulation in the sense that – 15, 20 years ago it was really dominated by examiners or former examiners, and there's been a real move to relying increasingly on academics. The industry has been relatively slow to adjust to that change," he said. "The downside of that is that if you look at it through an academic lens, you can miss some of the real-world consequences that a supervisor would pick up."
Baer will succeed Paul Saltzman, who helped increase the Clearing House's visibility in public debates.
"I've known Greg for a long time. He's a consummate professional with extensive relevant experience," said Saltzman, who is now a vice chairman at Deutsche Bank. "I'm sure he'll carry on the legacy of the Clearing House delivering empirical and analytical-based advocacy on behalf of the nation's largest financial institutions. It's a great choice."
The group is known for submitting detailed policy positions and undertaking sometimes ambitious plans, including running a massive war game-scenario several years ago in which it simulated the failure of a large bank in order to see if new powers granted to regulators by the Dodd-Frank Act worked as intended.
"Greg is a seasoned industry executive with deep regulatory policy skills," said Brian Moynihan, CEO of Bank of America who also serves as chairman of The Clearing House's Supervisory Board, in a press release. "He will be a strong leader for TCH's policy work."
