The case for an uber-regulator

September 2, 2009

FDIC chief Sheila Bair banged the gavel loudly this week with her op-ed piece in the New York Times railing against calls for a single regulatory body to oversee the many complex and disjointed elements of the financial marketplace. It seemed a bit odd. Even before Obama backed Ben Bernanke for another run at the helm of the Fed, it didn’t seem that anybody was seriously pushing for the creation of such a mighty organ of government. White House moves to streamline banking regulation – which Bair supports – are probably at the root of concerns about overconsolidation.

The White House wants a more streamlined approach to financial regulation and has called for one national bank supervisor through the merging of the Office of the Comptroller of the Currency and the Office of Thrift Supervision. State bank supervision would be left to both the Federal Deposit Insurance Corp and the Federal Reserve.

The debate encouraged fierce fief defense efforts at all regulators involved, and can be seen playing out elsewhere in the halls of power. Today and tomorrow, the two main U.S. agencies regulating securities and futures markets, the SEC and CFTC, try to kiss and make up after a long turf war about who gets to oversee what.

The meetings should make for good blog fodder and more than a few more weighty opinion pieces. And while a new era of mutual understanding and respect could emerge, it’s difficult to see how allowing fiefdoms to battle over jurisdiction improves efficiency or effectiveness in regulation.

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