NEW YORK ( TheStreet) -- Eugene Ludwig was U.S. Comptroller of the Currency from 1993 to 1998 during the Clinton Administration, a period characterized by significant deregulation of the financial services industry. He later joined Deutsche Bank ( DB) as vice chairman, before founding Promontory Financial Group in 2001.

A powerhouse consulting firm to the financial services industry, Promontory has advised clients including Citigroup ( C), Countrywide Financial, prior to its acquisition by Bank of America ( BAC), and Allied Irish Banks ( AIB), according to BusinessWeek. Promontory also advised Morgan Stanley ( MS) on its conversion to a bank holding company in 2008, according to a Morgan Stanley press release. Promontory will not identify its clients.
Eugene Ludwig

Ludwig is also managing partner of CapGen Financial, a financial services-focused private equity firm.

The following interview has been edited.

TheStreet:A lobbyist I spoke to believes you have an unfair advantage in that you are able to influence policy without having to register as a lobbyist yourself. What do you say to this?

Ludwig: Our job at Promontory is to help companies figure out how to implement rules, not engage in fruitless arguments about the wisdom of Congress' creating those rules. When government says we want a better compliance system, we try to figure out how to build a better compliance system within the rules. That's our business.

TheStreet:You are said to have an important role in shaping the financial reforms regulators are working on at the moment coming out of last year's Dodd Frank financial reform legislation. Please describe your role.

Eugene Ludwig: I testified before Congress several times on the Dodd-Frank bill. My views were my own; I was not representing anyone. As an ex-regulator, I felt it was my duty to express my own views. As a matter of good public policy the country would be much better off with a single regulatory agency in the banking space rather than multiple agencies. A single agency would have one set of rules, and financial institutions would not have to answer to multiple regulators with all the confusion and expense this entails. I said this when I was Comptroller of the Currency fifteen years ago, even though some of my colleagues in the OCC preferred the status quo. My view was accepted by Treasury, but not by the Congress where each agency had its own set of champions protecting its perceived interest.

TheStreet:Do you support Elizabeth Warren as head of the Consumer Financial Protection Bureau?

Eugene Ludwig: The candidates I've heard mentioned for the CFPB are all well qualified. That is not the issue. Looking ahead, what we need is a CFPB that maximizes consumer well-being without imposing unnecessary burdens on the financial industry. Rules need to be rational and uniform across the industry.

TheStreet:Are there some important items on the regulatory agenda coming out of the Dodd Frank legislation that you think are being overlooked?

Ludwig: One that's less obvious is the importance of the Office of Financial Research. It has not received public focus, but it potentially offers a great deal of benefit. Identifying potential bubbles and disruptions in the American financial scene could be critical to preventing future melt-downs. However, it first needs to get off the ground, and, to make certain that it delivers unvarnished views, it should be independent of Treasury.

TheStreet: What's your view on how new rules are progressing to oversee the derivatives market?

Ludwig: Derivatives, like many modern technological products, have the potential to be good or bad. The Blanche Lincoln amendment is a mistake and ought to be repealed because the issue is not where derivatives are managed, but how they are managed. The notion that you somehow make the world a safer place by splitting those operations - with some in the bank and some out - does not solve anything. Just because they're placed in an affiliate of the bank doesn't insulate the bank, and it creates complex structures that could actually shroud problems and hinder oversight.

-- Written by Dan Freed in New York.
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