Administration Seeks Single Overseer of Banks, Thrifts : Regulation: The proposal, which would merge the Fed, FDIC, OTS and comptroller, gets a mostly cool reception.


The Clinton Administration on Tuesday called for creation of a single federal banking agency to regulate the nation's sprawling financial system.

"It just makes no sense to have four separate agencies, overlapping, often in conflict, in charge of our financial institutions, " Treasury Secretary Lloyd Bentsen told a news conference.

However, the plan to combine four current agencies into a single commission was greeted with a notable lack of enthusiasm by the Federal Reserve Board, which guards its independence with fierce political skill and determination.

The banking industry was also lukewarm to the idea of a single regulator. One industry spokesman, Kenneth Guenther, dismissed the merger proposal as "a very old chestnut" that was proposed by both Presidents Jimmy Carter and Ronald Reagan without action by Congress.

The plan would combine the examination and regulatory work of the Federal Reserve Board, the Federal Deposit Insurance Corp., the comptroller of the currency and the Office of Thrift Supervision. Their work would be carried out by a new, independent, five-member agency known as the Federal Banking Commission.

Currently, the Federal Reserve Board regulates bank holding companies, the FDIC insures deposits up to $100,000, the comptroller supervises national banks, and the OTS regulates the S&L; industry. The comptroller and the OTS operate as part of the Treasury, while the Fed and the FDIC are independent.

"We've got to get rid of the inefficiencies in our government," Bentsen said, adding that the regulatory structure "was designed for another time that long since has passed."

A major change in regulation would require legislative approval by Congress, which has been reluctant to interfere with the divided regulatory structure that has been in place for decades.

The proposed Federal Banking Commission would manage the regulation of banks and conduct periodic examinations of their financial condition. Bentsen said the plan would keep the Fed as the handler of monetary policy and retain the FDIC's role as insurer of deposits at banks and thrifts.

But the Fed said in a statement that its role in the monetary arena cannot be separated from its ability to probe the financial health of individual banks.

The Fed defended its work in examinations and regulation, saying that "a hands-on role in banking supervision is essential to carrying out the Federal Reserve's responsibility for the stability of the financial system and is vital for the effective conduct of monetary policy." Any change should safeguard "the important benefits of the current system," the agency said.

American Bankers Assn. spokesman Christopher Rieck said a single agency would be welcomed if it meant fewer regulatory exams. But bankers also fear that a single federal regulator could threaten the traditional dual banking system, in which some institutions are chartered by the states while others have a federal charter, according to Rieck.

Strong opposition was expressed by the Independent Bankers Assn., which represents small banks.

"If you have three separate pairs of eyes looking at the same problem, it can be very useful," said Guenther, who is association executive vice president. "The S&Ls; had a single regulatory agency, and it didn't help them" during the massive scandals of the 1980s.

The thrift industry was more receptive to the idea. Alfred Pollard, director of governmental affairs for the Savings and Community Bankers Assn. of America, said his members are "upbeat on this idea" of consolidation. "We're looking for ways to streamline regulations and reduce costs," he said.

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