WASHINGTON -- The American Bankers Association and America'sCommunity Bankers wrote a joint letter to Treasury advocating formaintaining a separate Office of the Comptroller of the Currencyand Office of Thrift Supervision at Treasury.

Treasury Secretary Henry Paulson recently announced that hewould be looking to create some efficiencies among the bankingregulators late last month. A Wall Street Journal article cited thepossible combination of the bank and thrift regulatory agencies. Italso said that Paulson has called the British single regulatormodel for financial services "interesting", but probably notappropriate for the United States.

The groups commended Treasury for its work toward efficiency andwanted to work with the department in that direction. The letterread, "We are also eager to work with Treasury to modernize ourfinancial regulatory structure. Successful enactment of a modernprogram of supervision for the housing government sponsoredenterprises would be a good, concrete step in that effort."

However, Treasury's June 27 announcement has stirred speculationof a merger of the regulators, the letter noted. While ABA and ACBsaid they appreciated that Treasury was going to approach theprocess "with an open mind" the groups still expressed their strongopposition to a merger of the regulators.

"We believe any such plan would ultimately fail as it has in thepast. We fear, however, that pursuit of such a plan could sidetrackmore direct efforts that could improve our financial

system," ABA and ACB wrote.

Ironically, the two banking trade associations just announced amerger agreement late last month.

The letter, signed by ABA Chairman Earl McVicker and ACBChairman Mark E. Macomber, said, "We agree wholeheartedly with youthat the competitiveness of the U.S. financial markets isparamount. We believe that a merger of the banking agencies wouldnot further the goal of financial competitiveness. We believe itwould, in reality, decrease the competitiveness of the U.S. bankingsystem by negatively impacting true charter choice and theinnovation and flexibility that charter choice provides, a uniquecompetitive advantage enjoyed by the American banking system."

It concluded, "We believe a Treasury focus on greatercooperation and communication among the existing banking agencies,together with a productive effort to streamline regulation toreduce burden, is the best way to enhance the competitiveness ofour

entire industry."

In related matters, the Financial Services Regulatory Relief Actsigned into law last year required a study of regulatoryconsolidation

now underway.

NCUA actually started life in 1934 as the Federal Credit UnionDivision of the Farm Credit Administration, according to theagency's 1999 Annual Report. Then in 1942, supervision transferredto the FDIC. By 1948, the Bureau of Federal Credit Unions was underthe Federal Security Administration. The Bureau became part of theDepartment of Health, Education and Welfare in 1952 until 1970 whenit became an independent agency. The three-member board structurewas adopted in 1979.

So does consolidation talk have NCUA nervous? "We have not beenmade aware of any discussions on the merging of NCUA with any otherpart of the federal government," NCUA Director of Public andCongressional Affairs John McKechnie said.

In a pre-emptive move, NAFCU Senior Vice President of GovernmentAffairs Dan Berger said, "We have had conversations with Treasuryofficials and the Administration as late as last week voicing ouropposition to the NCUA being part of any regulatory consolidationplans."

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