Congress could merge Fed into national regulator

Congress could merge the Federal Reserve’s bank supervisory authority into a newly created national bank regulator as part of regulatory reform under consideration on Capitol Hill, a key lawmaker said Friday.

“You may get a combination of the national bank supervisor and the Fed, but state bank regulation should remain separate,” said House Financial Services Committee Chairman Barney Frank, D-Mass.

Frank and key lawmakers in the Senate and House agree that the Office of Thrift Supervision should be combined with the Comptroller of the Currency.

However, Senate Banking Committee Chairman Christopher Dodd, D-Conn., is seeking to create a consolidated bank regulator by combining all federal bank regulators, including the Federal Deposit Insurance Corp., into one entity.

Frank said he is in discussions with Dodd on the issue, which could combine the central bank’s responsibility to supervise and complete on-site exams of banks into the larger national regulator. “We’re shuffling back and forth.”

He contends that it would be difficult to combine the FDIC into a consolidated bank regulator because of the agency’s role in overseeing state chartered banks along with state bank regulators.

“It is hard to merge the FDIC into a national bank regulator because it regulates state charter banks along with state supervisors,” Frank said. “State regulators don’t want to be in one regulator and we don’t want to get rid of the duel banking system where we have state and national bank regulators.”

(c) 2009, Inc. Source: McClatchy-Tribune Information Services.