Bank Regulator Echoes CU Position re: Single Regulator Posted by AVCU on 10:55 AM

Comments by Federal Deposit Insurance Corporation Chair Sheila Bair to members of the U.S. Senate Banking Committee yesterday sounded oddly similar to the position credit unions have long held regarding regulatory consolidation. Her position was that a single regulatory agency would be “no panacea.” In testimony before the committee Bair said that merging financial regulators into one entity would overlook the needs of community banks and that “proposals to create a unified supervisor would undercut the benefits of diversity that are derived from the dual banking system.” Community banks would be ignored by a single regulator whose oversight includes much larger institutions, she cited. Such a regulatory structure would have to accommodate more than 8,000 banks in 50 states “with significantly different economies.” Consolidating the agencies would cause “distractions and organizational confusion” at a time when staff is tied up with banking industry challenges, according to Bair.

For a long time credit unions have argued that their dual chartering system of state versus federal regulators provides a form of checks and balances, and that credit unions would most certainly get lost in the shuffle if their regulatory oversight were moved under a single national regulator of financial institutions.