While our current Byzantine bank regulatory structure "offends all of our aesthetic and logical instincts," it works "extremely well," Comptroller Jerry Hawke said this week, responding to recent calls by FDIC Chairman Don Powell and others to explore ways to reform and rationalize the structure. Formal mechanisms and external pressures cause the agencies to work well together, cost savings to be realized from regulatory consolidation are likely quite modest, and the industry is not clamoring for change, Hawke said.
In addition, two major issues present challenges for regulatory restructuring: the role of the Federal Reserve and the FDIC in bank supervision, and the impact on state banking systems and the dual banking system. The Fed has successfully argued bank supervision gives it a "window" into the banking system necessary to conduct monetary policy. Likewise, the FDIC's role as deposit insurer gives it a strong argument for involvement in bank supervision.
Regarding the dual banking system, Hawke said a single federal bank supervisor of both state and national banks might render charter choice meaningless, and exert very strong pressure for uniformity in powers between state and national banks.