The Conference of State Bank Supervisors (CSBS) today sent a letter to Senate Banking Committee Chairman Chris Dodd, expressing our strong opposition to legislative proposals that would consolidate the federal bank regulators into a single regulatory agency with supervisory authority over all our nation’s banks. Such an approach will inevitably produce further industry consolidation and eliminate necessary regulatory checks and balances.
CSBS President and CEO Neil Milner says this is not a debate about “turf,” as it is so often characterized, but rather it is about the future of state and local economies and the accountability of our financial system to the needs of the average citizen and small business.
The letter further states that a single regulator would create greater opportunities for regulatory capture, further distances financial regulation from the public and would create conflicts that threaten the viability of state chartering and regulation which is the source of the diversity of our financial system.
Despite the stated objective of creating an efficient and seamless system of financial supervision, CSBS believes the creation of a single federal regulator would have a disastrous impact upon our nation’s banking industry and economy as a whole. Smaller institutions, the very banks that prevented a complete collapse of our economy, would be further disadvantaged, to the point where we would eventually be left with an industry consisting of nothing more than a handful of mega banks.
Instead, CSBS strongly encourages Congress to craft a regulatory system which requires greater coordination between state and federal regulators. Such a system would benefit from the local perspective, experience, and field resources of the state system and the broad economic and policy view of the federal government.