Banking Groups Urge Senate Lawmakers to Oppose Single Bank Regulator

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter, Oct. 20, 2009.

The American Bankers Association and the Independent Community Bankers of America are urging Senate lawmakers not to move ahead on a proposal to create a single bank regulator, arguing that a bad decision taken by a single regulator could potentially have a “catastrophic” outcome.

Senate Banking, Housing and Urban Affairs Committee Chairman Sen. Chris Dodd, D-Conn., wants to create a single regulator, insisting that it would eliminate the overlaps and red tape created by the “current alphabet soup” of regulators.

In a letter to Dodd and ranking member Sen. Richard Shelby, R-Ala., the groups wrote that experience abroad has shown that a single regulator could be expected to focus first and foremost on the largest institutions. With regulatory power concentrated in Washington D.C., the groups insist, “it is natural that bank regulation will favor programs supervised from Washington.” A state-chartered bank would find that regulatory burdens disadvantage state banks and decide it is more efficient to operate as a national bank, according to the groups.

As for the argument that switching between regulators was a key factor behind the financial crisis, the bank groups note that a provision could be included in legislation that would prohibit switching for institutions under special supervisory scrutiny. In fact, regulators have already adopted rules to achieve that goal, they note.

Meanwhile, at an October 15 conference in New York Treasury Secretary Tim Geithner, asked about Dodd’s single regulator proposal, replied that such a system was “not necessary and probably not desirable.”

Product Spotlight

Bankruptcy Law Guide    New bankruptcy legislative requirements and changing economic conditions have drastically increased the amount of information required to handle this costly and uncertain area of law. The Bankruptcy Law Reporter provides all the most up-to-date information necessary to navigate the maze of bankruptcy law. Whether it's simply ensuring your company is on solid legal and financial ground, settling court disputes or protecting your own personal interests in a corporate or personal case, the answers are all here.   More Info...

Bank Digest Bank Digest tracks the latest banking activity, regulatory changes and trends in federal banking policy. Each day, Bank Digest provides both a concise abstract and the full text of that day's releases from the federal agencies that impact the banking industry. Bank Digest also provides additional detail of significant events in weekly and monthly features.   More Info...

Consumer Credit Guide In the past, many states have attempted to cure problems and abuses that have appeared on a "one-at-a-time" basis, resulting in a multiplicity of consumer credit laws. In addition, the federal government has injected standards into broad areas of consumer credit previously regulated only by the states. The CCH Consumer Credit Guide publishes the information that you need to succeed in the complex area of state and federal consumer credit laws and regulations.   More Info...

Financial Privacy Law Guide This product provides comprehensive coverage of federal and state laws, regulations, interpretations and decisions. The Guide covers data security, insurance and health information privacy, fair credit reporting, bank secrecy, identity theft, the Gramm-Leach-Bliley Act, the E-Sign Act, the Electronic Fund Transfer Act, the Freedom of Information Act, the Right to Financial Privacy Act and international privacy. More Info...

State Banking Law Reporter Expedite your research with the CCH© State Banking Law Reporter. Now there's a single source for state banking law, giving banking professionals and legal counsel ready access to the information you need. State Banking Law Reporter combines the full text of state laws and regulations with authoritative explanations and consistent, topical organization.   More Info...