Super-Regulator for Banking Institutions?

Posted By Cliff Tuttle | September 20, 2009

Posted by Cliff Tuttle (c) 2009

SUMMARY: Consolidating the four federal regulators into one super-regulator is a bad idea.

The New York Times reported today that Senator Christopher Dodd of Connecticut, Chairman of the Senate Banking Committee, is proposing that four Federal regulators, including the Federal Reserve, the Office of Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Office of Thrift Supervision be consolidated into a super-regulator.

In practice, the four regulators often work in tandem, jointly issuing regulations. But each regulator is mindful of the special needs in its own bailiwick.

But there is one overpowering reason why this is a bad idea. The federal associations regulated by the Office of Thrift Supervision (OTS) are in the main much smaller than the national banks under the aegis of the Office of Comptroller of the Currency. One regulator means one style of regulation. Community Banks, especially those with good capital and fewer problem loans, do not need to bear the increased burden that is sure to follow such a change.

One size does not fit all.

CLT

Welcome

CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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