FDIC chief warns against single U.S. bank regulator

By Reuters Staff
September 1, 2009

Federal Deposit and Insurance Corporation (FDIC) Chairman Sheila Bair addresses the HOPE Global Financial Literacy Summit at a community center in Washington June 17, 2009.  REUTERS/Jonathan Ernst  Sept 1 (Reuters) – A single regulator for all U.S. banks is not the solution to streamline the financial regulatory system, Federal Deposit Insurance Corp Chairman Sheila Bair wrote in an opinion column in the New York Times.

Bair said some have advocated creating a single regulator for all federal- and state-chartered banks, but that would benefit only the largest banks.

“A single regulator’s resources and attention would be focused on the largest banks. This would generate more consolidation in the banking industry at a time when we need to reduce our reliance on large financial institutions and put an end to the idea that certain banks are too big to fail,” she said.

“We can’t put all our eggs in one basket. The risk of weak or misdirected regulation would be increased if power was consolidated in a single federal regulator. We need new mechanisms to achieve consensus positions and rapid responses to financial crises as they develop.”

Bair said, however, she was an active supporter of the key pillars of reform, including the creation of a consumer financial protection agency and the plan to consolidate the supervision of federally chartered financial institutions.

“Calls for consolidation beyond the administration’s plan fail to identify the real roots of last year’s financial meltdown,” she wrote.

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