Senate proposal: single US regulator

A single banking regulator for the US has just been proposed by a key Senate committee. The suggestion is not new. A single regulator was suggested in 1993 by then treasury secretary Lloyd Bentsen, following a wave of thrift and bank failures. The proposal, to consolidate all four federal banking regulation and supervision agencies, went nowhere.

Sixteen years later, the Obama administration proposed to reduce the four agencies to three, by eliminating the Office of Thrift Supervision through consolidation with the Office of the Comptroller of the Currency. But critics argued this would “allow financial groups to continue to shop for the weakest regulator”.

The proposal for a single regulator has its support. But not from the Fed, FDIC, or smaller regulators, who argue they are best placed to supervise banks. Indeed, a recent bill drawn up by the Treasury proposed to extend Fed powers.

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“A key Senate committee on Tuesday proposed a sweeping overhaul of the US regulatory architecture that removes powers from the Federal Reserve and creates a single banking regulator.

Chris Dodd, chairman of the Senate banking committee, presented a vision for regulatory reform that is more radical than proposed by the Obama administration and will usher into the open a behind-the-scenes struggle involving banks, policymakers and regulators.

Democrats lined up behind Mr Dodd as he presented the bill but senior Republicans were missing from a press conference in Congress in spite of attempts by President Barack Obama to secure their support.

The proposal to consolidate regulators – the boldest proposal in more than 1,100 pages of draft legislation – faces strident opposition from the Fed, the FDIC and smaller regulators who argue they are best placed to supervise banks.”

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