Magazine article American Banker

Clinton Bank Plan Would Allow Exams by States

Magazine article American Banker

Clinton Bank Plan Would Allow Exams by States

Article excerpt

WASHINGTON -- A top Treasury Department official said the Clinton administration's plan to merge the bank regulatory agencies would permit competent state agencies to have sole examination authority for well-run small banks.

In an effort to mollify critics of the administration's plan, Treasury Under Secretary Frank Newman said he is considering refinements to the proposal that would protect the dual banking system. Bankers have objected that the administration's plan would eliminate the role of state regulators.

Avoiding Duplication

"We should not duplicate what is being done well by state government," Mr. Newman said in an interview Thursday.

Mr. Newman said the department is considering proposing a system in which a Federal Banking Commission would have authority to certify state banking departments "which are very professional."

Those departments could then examine "the thousands of state-chartered banks that are small in size," he said.

"If state bank examiners go in and find it well-capitalized, there is no reason for a federal agency to duplicate that," he said.

However, Mr. Newman said that the proposed federal banking commission would still be expected to examine all large banks and small banks that turn out to be in poor condition.

Small Bank Concerns

Mr. Newman said the department is still considering where to draw the line on what should be considered a small bank, but added that the upper limit could be from $100 million to $250 million of assets. …

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