Situation Normal-For Awhile Yet At Least

Talks have been under way for months over the merging of the regulators into a single, new Federal Banking Agency.

Under the new supervisory agency, the Office of the Controller of the Currency (OCC), the Office of Thrift Supervision (OTS), the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Bank (FRB) would be consolidated so that there would be only one supervisory agency. It has been dubbed the Federal Banking Agency.

The long discussion taking place in Washington, DC is over the fact that the Federal Reserve did not approve of all oversight coming from a single source. They felt it was important to keep a system of checks and balances. The FDIC and the Fed have been the major participants of the discussions, being the largest of the four agencies.

Unfortunately, after finally getting to a point in the negotiations where Fed and the FDIC were reaching agreements, Congress adjourned for the Memorial Day holiday. And congressional banking committees have said they have too much to consider already in the coming session with interstate branching and the Community Development Financial Institutions (CDFI) bill. It appears they will not get to acting on the merger of the bank regulatory agencies this year.

The Clinton administration declared at the beginning of the year that the merger of the regulators is one of their primary goals.

FDIC and Fed have been holding talks since the beginning of the year. They have had difficulty in finding any common ground.

Part of their agreement reportedly is that the authority for most banks and thrifts would be in the new Federal Banking Agency, but Fed would maintain authority over a group of very large institutions. Bankers, on the whole, are in favor of the consolidation of regulators so that regulations and rules would be consistent, rather than examiners in each agency being guided by a different set of rules.

Copyright © 1994 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 4, No. 11, 6/94