Magazine article American Banker

Greenspan Hits Superregulator Plan as a Bar to Innovation, Risk-Taking

Magazine article American Banker

Greenspan Hits Superregulator Plan as a Bar to Innovation, Risk-Taking

Article excerpt

WASHINGTON -- Federal Reserve Chairman Alan Greenspan stepped up his attack Saturday on the administration's proposal to merge the regulatory agencies, saying it would discourage risk-taking and innovation and destroy the benefits of joint oversight by state and federal agencies.

A single regulator would "effectively end the dual banking system," Mr. Greenspan said. "It would become an empty shell if a state-chartered entity had no choice of federal regulator or different asset powers."

"I, as well as my colleagues on the board, believe that would be a tragic loss," he added.

Speech to IBAA

Mr. Greenspan spoke in Orlando to the Independent Bankers Association of America. A copy of his text was released in Washington.

The Fed chairman's comments continued the debate that has raged since Treasury Secretary Lloyd Bentsen proposed merging the four bank and thrift regulators into a single agency, stripping the Fed of its direct bank oversight authority. Industry support for that approach has dwindled as bankers have grown wary of the excessive power and rigidity they fear in a single regulator.

The Fed has proposed an alternative to the administration plan - one that would keep two federal regulators, one of them the Fed itself. But critics have called that plan complex and unworkable. Some, including Treasury officials, have seen just a turf battle in the Fed's fight to maintain its oversight role.

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