Magazine article American Banker

Fed Faulted for Opposing Merger of Regulators

Magazine article American Banker

Fed Faulted for Opposing Merger of Regulators

Article excerpt

WASHINGTON - A group of independent industry experts scolded the Federal Reserve on Monday for opposing a merger of the bank agencies.

The Shadow Financial Regulatory Committee endorsed the Clinton administration's plan to consolidate bank regulation into a single agency, but did offer five suggestions to improve the proposal.

Speaking for the shadow committee, bank turnaround specialist Lawrence Connell said a simplified and streamlined Federal Banking Agency would reduce regulatory costs. Accountability, too, would be improved, he said.

Agencies Under Fire

"The most vigorous opponents are the agencies themselves, in particular the Federal Reserve, which has claimed that its participation in bank supervision is necessary," Mr. Connell said at a press conference on Monday.

"Under the administration's proposal, the Federal Reserve will have sufficient information to implement monetary policy."

Treasury Secretary Lloyd Bentsen announced Nov. 23 that the administration wants to combine the bank supervisory functions of the Fed, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the Office of Thrift Supervision.

Would Have Access to Exams

The Fed opposed the move, arguing that it must retain its current relationship with banks to conduct monetary policy. The administration's plan does give the Fed access to any bank exam report. The Fed also would retain control over the discount window and operation of the payments system. …

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