Newspaper article St Louis Post-Dispatch (MO)

Banking Overhaul Sought Bentsen Proposal Lessens Fed Role

Newspaper article St Louis Post-Dispatch (MO)

Banking Overhaul Sought Bentsen Proposal Lessens Fed Role

Article excerpt

Treasury Secretary Lloyd Bentsen, in a bid to shrink the federal bureaucracy and pump new life into banks, proposed Tuesday to merge the jobs of the four agencies overseeing banks and thrifts into a single banking commission.

"Right now we have a system where the regulation is scattered all over," Bentsen said. "It was designed for another time, and that time has long since passed."

The plan - which Bentsen says would make banks and thrifts more competitive - would strip the powerful Federal Reserve Board as well as the Federal Deposit Insurance Corp. of key powers they wield in overseeing the banking industry.

Two agencies that operate under the Treasury - the Office of the Comptroller of the Currency and the Office of Thrift Supervision - would be scrapped. The comptroller's office oversees national banks and the thrift office regulates thrifts.

Their jobs, along with the supervisory roles of the Fed and the FDIC, would be merged into a new, independent Federal Banking Commission with a five-member board.

The FDIC, which now oversees state-chartered banks that do not belong to the Federal Reserve system, would continue to insure deposits, take over failed institutions, sell assets, and pay off depositors.

The Fed would continue to influence short-term interest through monetary policy. The Fed currently regulates bank holding companies, some state-chartered banks and foreign banks.

In response to the plan, the Federal Reserve Board warned that the board needs a "hands-on" role in supervising banks to ensure a stable financial system and to carry out monetary policy.

"The most controversial item in there - and what ultimately sank President (George) Bush's (banking reform) plan - is the alternation of the Fed's role," said Washington bank consultant Karen Shaw.

Bentsen said the plan - which would overhaul a system that dates to 1863 - would ensure the safety of the nation's nearly 13,000 commercial banks and thrifts, boost the economy, and lower costs for both banks and consumers. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.