Assistant Treasury Secretary Mary Miller Met with the Baltimore CFA Society [BCFAS] on Tuesday.? Given her prior efforts at T. Rowe Price, it was a bit of a “welcome home” for a local woman who has excelled.? And she said that it was great to be back in Baltimore, though at the end of the presentation she said it wasn’t unpleasant working in the Treasury Department.

She talked about four things, and left a lot of time for questions, much to her credit.? Here are the four items:

1) Drafting of regulation for the Volcker Rule.? Her direct comments and answers in the Q&A indicated an understanding of the difficulties in getting banks to stop taking significant trading and equity risks.? Nonetheless, she did not offer that the Treasury has a silver bullet.? And, as I would say, there can’t be one, unless the US wants to outlaw investment banking.? Nonetheless, new regulations are coming next week for comment.

2) On securitization, new rules are being proposed as well next week.? There are several targets:

• Raise underwriting standards.
• Align incentives of originators with investors.
• Create a clear and open system.
• Don’t interfere with the efficiency of capital.
• Place the proper burdens (my phrase) on each player in the chain of securitization.

These goals are somewhat self-contradictory, but hey, this is the US Government!? They specialize in contradictions.

3) Two weeks from now, housing finance reform ideas will be out.? They have many contradictory goals:

• Make mortgage finance widely available.
• Protect consumers against deception in lending.
• Provide for affordable housing, both through renting and ownership.
• And not burden the taxpayer with these costs.

We can all dream, but for me this is the financial equivalent of antigravity.

4) Financing the Government

• Focus on flexibility of funding
• Mention that the TARP has lost little money, if any at all.? See, I mentioned it. Mary.? (Please ignore the GSEs, who may lose half a trillion before this is all done.? How does that affect the value of our money?)
• She mentioned how the US government has lengthened the maturity of debt from 49 months to 60 months.
• She then mentioned that it was critical for the government to raise the debt ceiling.

I like Mary Miller.? I interviewed with her in 2003 as a 42-year old oldster, because T. Rowe Price hires only young people, and promotes from within.? It took 4 major investment banks banging on the door to get me the interview, but you can’t overcome T. Rowe Price culture for good or for bad.? Their loss, I say.? At my interview, I remember thinking that I would like to work for her.

There was a long Q&A, which she did pretty well at answering.? There was at least one nut in the audience who could not formulate his question clearly in a short amount of time.? Very annoying.

That said, there was one questioner who asked about about offering floating rate and long duration debt, and she gave him a complete but noncommittal answer, much as he received from Treasury officials at another time.? A reasonable answer on that question, but got no answer to his second question, “How much help to your Treasury issuance is the buying of the Federal Reserve for QE2?”

His friends noted that there was no answer, and a few commented, “Hey, you were there only one that asked a question that got no answer.? Way to go!”? He was less happy or excited about all of it.? He just wanted an answer, and wasn’t sure if Mary Miller forgot, or didn’t want to answer.? He assumes the former, being a humble blogger, small asset manager, and one who assumes the best of others most of the time.