The House Financial Services Committee wrapped up a long day of hearings on the Administration’s proposed financial regulatory reform as regulators weighed in late Wednesday. After hearing solely from Treasury Department secretary Tim Geithner, who spoke on the Administration’s proposals for sweeping reform early Wednesday, Committee members heard an emerging consensus that merging major regulators into one entity would be ineffective to exercising authority in areas that require different forms of regulation. Committee members seemed to agree on the need for some form of overhaul in the financial system. Rep. David Scott (D-Ga.), for example, noted unemployment and foreclosures climb at a time when banks are not lending to small businesses, which create the jobs. “There seems to be a freezing of the arteries within the banking system,” Scott said. But unfreezing the banking system requires a convergence of the Administration and lawmakers on moving reform legislation through. Rep. Scott Garrett (R-NJ), for example, noted Committee chairman Barney Frank’s (D-Mass.) recent suggestions to narrow the proposed Consumer Financial Protection Agency (CFPA) seem to contrast the Administration’s move to apply reform on a much broader basis, to areas of the system that did not cause the fundamental problems at hand. Federal Deposit Insurance Corp. chairman Sheila Bair, the first witness at the hearing, indicated the FDIC supports the CFPA. She also urged a new resolution regime to resolve financial institutions similar to the way the FDIC steps in and resolves banks. She called for larger capital buffers at financial institutions but warned against removing consumer protection examination and supervision from other supervisory efforts — like safety and soundness supervision — which she said could undermine the effectiveness of both efforts. “A strong case can be made for creating incentives that reduce the size and complexity of financial institutions,” Bair said in prepared remarks. “A financial system characterized by a handful of giant institutions with global reach and a single regulator is making a huge bet on the performance of those banks and that regulator. ” Office of the Comptroller of the Currency (OCC) John Dugan said the OCC supports a council of financial regulators in the Administration’s proposal, as well as some consolidation of regulation to be applied to all systemic financial institutions, including securities and insurance firms. The OCC, he added, supports the goals of the CFPA, but said rule writing would not be uniform at the new agencies, as the proposal indicates states can adopt different rules. Dugan said the CFPA ought to provide for federal banking agencies’ input for uniformity in rule-making. The final two witnesses to present opening remarks at the Committee hearing shared comments that a consolidation of major regulators into a single entity — similar to proposals formed by Sen. Christopher Dodd (D-Conn.) — would fail to address the key issues of financial regulatory reform. Office of Thrift Supervision acting director John Bowman said Congress will not solve the “problems of tomorrow” by merging regulatory agencies. This move for blanket regulation would be inappropriate for all financial firms, Bowman said. Focusing the same regulation on community banks and large financial institutions with different needs, for example, would prove costly and inefficient. The North Carolina Commissioner of Banks Joseph Smith Jr., on behalf of the Conference of State Bank Supervisors, indicated some concern over a consolidated financial industry that consumes the attention of regulators and is “unmoved” by the needs of consumers and communities. He added it is a misconception that a consolidated, “monolithic” regulatory system will lead to stronger financial system. Write to Diana Golobay.