Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, November 24, 1993 TAG: 9311240132
SECTION: NATL/INTL PAGE: A1 EDITION: STATE
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The proposal was widely praised, except by the Federal Reserve Board and its supporters.
The current system "was designed for another time," Treasury Secretary Lloyd Bentsen said. "It just makes no sense to have four separate agencies, overlapping, often in conflict, in charge of our financial institutions.
"It is a drag on the economy, a headache for our financial services industry and source of friction within our government," he said.
The plan would weave into an independent five-member commission the bank regulatory duties of the Federal Reserve Board, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Office of Thrift Supervision.
The heads of the two Treasury agencies that would be abolished - the OCC, now responsible for national banks, and the OTS, which regulates the savings and loan industry - applauded the move.
But the proposed change received a decidedly negative response from the Federal Reserve, which has fiercely defended its independence and fought off attempts to diminish its power over monetary policy or the nation's banking system.
Bentsen insisted the plan would leave untouched the Fed's power over the economy through its ability to set interest rates.
However, a terse Fed statement said, "It is the long-held conviction of the board that a hands-on role in banking supervision is essential to the carrying out of the Federal Reserve's responsibilities for the stability of the financial system and is vital for the effective conduct of monetary policy."
The Independent Bankers Association of America, which represents many Fed-regulated banks, agreed.
"There was a single regulatory agency over the savings and loan industry, and we saw what happened," said Executive Director Kenneth Guenther.
Bankers in Roanoke greeted the proposal warmly, but with some caution until they learn the details.
F. Edward Harris, president of Crestar Bank's western region, said he could not discuss the specifics until he sees the proposal.
But, Harris said, "It's a positive that the whole idea of regulatory reform is moving up on the agenda." The present system of multiple regulators is tremendously inefficient, with a lot of inequities, he said.
While it could result in a more efficient operation, said Monty Plymale, executive vice president for the Southwestern region of Central Fidelity Bank, it was difficult to give an opinion without the details.
Lewis Nelson, vice president of NationsBank in Roanoke, said the idea is good if it puts regulatory people together to achieve economy and more efficiency. But he said he opposed the idea if it would mean executive control over the Federal Reserve Board.
Staff writer Mag Poff contributed information to this report.
Memo: shorter version ran in the Metro edition.