Extreme Infighting: US Bank Regulation from the Civil War to Basel
Readers who follow my jeremiads on this site know I have been intrigued by inter-agency dissatisfaction with the Federal Deposit Insurance Corporation’s attempt to impose securitization regulations of its own imagining on banks. (Specifically, the May 17, 2010 Notice of Public Rulemaking “Treatment by the Federal Deposit Insurance Corporation as Conservator or Receiver of Financial Assets Transferred by an Insured Depository Institution in Connection With a Securitization or Participation”.) ... So far as I know, only Comptroller of the Currency John Dugan has complained publicly. He thinks the FDIC approach is a roundabout way of influencing lending standards and unlikely to do anything but encourage non-bank lenders to take over securitization from banks. Instead, regulators should regulate bank-lending criteria. Mulling his comments at housingwire.com (“Who is Assaulting the FDIC?” and “It’s the Mortgage, Stupid”), I wondered why Dugan didn’t take the lead, if he felt so strongly enough to make speeches about it. After all, the OCC is the primary regulator of banks with national charters. Furthermore, the regulators, individually as well as collectively, have the power from Congress to make safety and soundness regulations for the institutions they supervise. After much puzzling, it occurred to me that I don’t know enough about federal bank regulation. Sure, there’s the pecking order in every textbook: the Fed supervises bank holding companies, financial holding companies, state bank members of the Federal Reserve System; the OCC national banks; the FDIC insured depositories including state banks not in the federal reserve system; the OTS federally-chartered and -insured thrifts and thrift holding companies. TO READ THE FULL STORY, SUBSCRIBE NOW.