Obama Administration Considers Single Bank Regulator
The administration may push for a single regulator to keep tabs on all banks.
May 28, 2009
WASHINGTON, D.C.— -- Banking reforms pushed by the Obama administration may include the creation of a single government agency dedicated to keeping the nation's banks in line, ABC News has confirmed.
Critics point to a lack of sufficient financial regulation and enforcement as one of the key contributors to what has become the worst financial crisis since the Great Depression.
"The way they propose it, it would create a single banking regulator but keep the other ones (and) just move the powers around," a source within the financial industry tells ABC News. "To just move the powers around seems to be just rearranging the deck chairs on the Titanic."
The Treasury Department and White House officials, meanwhile, are not offering specifics on their bank reform plans.
"The President is committed to signing a regulatory reform package by the end of the year and officials at the White House and the Treasury Department are continuing work with Congress on the final phases of a proposal, but there is no final proposal in place and any announcement will not be for a couple of weeks," said White House spokeswoman Jen Psaki.
The government must "create a more stable system, a system less prone to crisis, less vulnerable to the kind of crisis we just had, less vulnerable to future shocks," Treasury Secretary Tim Geithner said in an interview with Bloomberg TV last week.
The single bank regulator under consideration would require the consolidation of the Office of the Comptroller of the Currency and the Office of Thrift Supervision, according to The Wall Street Journal.
The proposal, if it goes forward, may face steep opposition from the banking industry.
"We are for regulatory reform and for some consolidation, but creating a single regulator will stifle innovation. One size does not fit all when it comes to bank regulation," said Scott Talbott of the Financial Services Roundtable.
Other proposals said to be under consideration include the designation of the Federal Reserve as the country's "systemic risk" regulator, meaning the Fed would be in charge of monitoring what, if anything, poses a threat to the entire financial system; the establishment of an agency to protect investors; the establishment of a consumer protection agency dedicated to certain financial products; and allowing the Federal Deposit Insurance Corporation to take over failing bank holding companies instead of just failing banks.