Director Vs. Board: Does An Agency’s Structure Really Matter?

By Joe Adler

In the battle over the Consumer Financial Protection Bureau, Republicans have insisted the new agency’s sole director must be replaced by a five-member board, arguing it would enhance accountability. But would it really make a difference? While most financial regulators are operated by a board of five to seven people, several analysts argue the structure of an agency matters much less than the people involved. A strong leader will find a way to accomplish their goals even with a board structure while an ineffectual one will be crippled regardless. Add unique historical factors and political considerations into the mix, and some say an agency’s structure has only a limited impact. “There’s no proven form of governmental organization that transcends either history or human frailty,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics. “We’ve seen powerful, potent boards, and completely incompetent ones. Is it the board or the people? … I’m an agnostic on this issue because in the entire body of organization theory there are things about each of the structures that define success, not one characteristic that predestines success.”