The government should have an independent systemic regulator but not combine the existing bank regulators into one agency and shouldn't create a separate regulator for financial products, ABA President Edward L. Yingling wrote Treasury Secretary Timothy Geithner.
The systemic risk regulator should be a council of regulators chaired by the Federal Reserve Chairman that would research problems and recommend solutions with the Fed as the lead regulator, Yingling wrote.
Having one bank regulator-combining the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the regulatory functions of the Fed and FDIC–would be "the end of a true dual banking system" that would disadvantage state-chartered banks.
He opposes giving the FDIC the power to resolve failures of non-bank firms, such as securities firms, hedge funds and insurance companies. Giving that agency additional power would undermine consumer confidence in the agency and would result in banks having to pay for an infrastructure for the regulation of non-bank activities.
Yingling also wrote that efforts to create a separate entity to regulate consumer financial products would likely result in an agency with overly broad jurisdiction. He added that it isn't rational to "separate consumer policy from enforcement, operational issues and safety and soundness issues."
The Obama administration plans to unveil its regulatory restructuring proposal in the coming weeks and has said it favors a systemic risk regulator but hasn't said in which agency it should reside. There have also been media reports saying that the administration favors a single bank regulator.
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