PRESS RELEASE
Federal Deposit Insurance Corporation
FOR IMMEDIATE RELEASE
October 16, 2002
Media Contact:
Phil Battey (202 898-6993)
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing
risks to which they are exposed. The FDIC receives no federal tax dollars — insured financial institutions fund its
operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-109-2002
FDIC CHAIRMAN POWELL CALLS FOR NEW, STREAMLINED SUPERVISORY
STRUCTURE TO OVERSEE FINANCIAL SERVICES
FDIC Chairman Don Powell today proposed a new federal supervisory structure for
banking, securities and insurance that would eliminate inefficiencies and costs in the
current system.
Under the proposal, the banking industry, the securities industry, and those companies
that choose an optional federal insurance charter would each have its own regulator,
which would meet regularly with the Treasury and the Federal Reserve to make
decisions on policy, as well as on systemic risk, permissible activities and product
regulation.
Describing the current system, Chairman Powell said: "All too often, when we engage in
turf warfare, the ultimate losers are the industry and the marketplace. The price is paid
in lost opportunities and lost competitiveness."
Chairman Powell added that there were three specific problems with the current system.
One, it wastes time; two, it wastes money; and three, it is becoming less and less
connected to the way the banking industry operates as a provider of a wide range of
financial services.
"The commodity we already lack today - and will increasingly lack in the future - is time,"
Chairman Powell said. "We will no longer have the luxury of lengthy consideration,
study, argument, debate, and delay. The industry - and the broader markets - will
require answers from the regulators much faster than we can provide them today. In
such a market, delay will be as good as denial."
On the issue of money, he noted that consolidation and reorganization of the regulators
would result in savings, and he noted that the FDIC, the Office of Thrift Supervision and
Federal Deposit Insurance Corporation
FOR IMMEDIATE RELEASE
October 16, 2002
Media Contact:
Phil Battey (202 898-6993)
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing
risks to which they are exposed. The FDIC receives no federal tax dollars — insured financial institutions fund its
operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-109-2002
FDIC CHAIRMAN POWELL CALLS FOR NEW, STREAMLINED SUPERVISORY
STRUCTURE TO OVERSEE FINANCIAL SERVICES
FDIC Chairman Don Powell today proposed a new federal supervisory structure for
banking, securities and insurance that would eliminate inefficiencies and costs in the
current system.
Under the proposal, the banking industry, the securities industry, and those companies
that choose an optional federal insurance charter would each have its own regulator,
which would meet regularly with the Treasury and the Federal Reserve to make
decisions on policy, as well as on systemic risk, permissible activities and product
regulation.
Describing the current system, Chairman Powell said: "All too often, when we engage in
turf warfare, the ultimate losers are the industry and the marketplace. The price is paid
in lost opportunities and lost competitiveness."
Chairman Powell added that there were three specific problems with the current system.
One, it wastes time; two, it wastes money; and three, it is becoming less and less
connected to the way the banking industry operates as a provider of a wide range of
financial services.
"The commodity we already lack today - and will increasingly lack in the future - is time,"
Chairman Powell said. "We will no longer have the luxury of lengthy consideration,
study, argument, debate, and delay. The industry - and the broader markets - will
require answers from the regulators much faster than we can provide them today. In
such a market, delay will be as good as denial."
On the issue of money, he noted that consolidation and reorganization of the regulators
would result in savings, and he noted that the FDIC, the Office of Thrift Supervision and
the Office of the Comptroller of the Currency currently spend at least $200 million to
fund back-office operations that are often duplicative.
On the issue of the supervisory system reflecting the operations of the banking industry,
Chairman Powell asked: "Why should three banks on the same street, offering the same
products and services to the same customer base, be regulated by three distinctly
different federal regulatory entities? Take the case of, say, a Fed-member institution
and a national bank. What redeeming features separate them that would justify a
completely separate and costly federal regulatory structure? And to what extent does
our structure improperly set the shape of the financial marketplace and inhibit innovation
and evolution?"
"The new structure should improve operating efficiencies, improve consumer and
industry responsiveness, and increase regulatory sensitivity to developments in the
marketplace," Chairman Powell said.
He recommended that the new structure should be financially and politically
independent - as the FDIC and the Federal Reserve Board of Governors are now - and
that it preserve the dual banking system of state and federal regulation for banks.
He added: "A streamlined structure like this would certainly make the functional
regulation idea envisioned in the Gramm-Leach-Bliley law more accessible and user
friendly. It would also ensure clear lines of authority and accountability. And the process
would be efficient enough to ensure the timely delivery of policy and consumer
protection decisions on a consistent basis across the entire financial sector."
A copy of Chairman Powell's speech is attached.
fund back-office operations that are often duplicative.
On the issue of the supervisory system reflecting the operations of the banking industry,
Chairman Powell asked: "Why should three banks on the same street, offering the same
products and services to the same customer base, be regulated by three distinctly
different federal regulatory entities? Take the case of, say, a Fed-member institution
and a national bank. What redeeming features separate them that would justify a
completely separate and costly federal regulatory structure? And to what extent does
our structure improperly set the shape of the financial marketplace and inhibit innovation
and evolution?"
"The new structure should improve operating efficiencies, improve consumer and
industry responsiveness, and increase regulatory sensitivity to developments in the
marketplace," Chairman Powell said.
He recommended that the new structure should be financially and politically
independent - as the FDIC and the Federal Reserve Board of Governors are now - and
that it preserve the dual banking system of state and federal regulation for banks.
He added: "A streamlined structure like this would certainly make the functional
regulation idea envisioned in the Gramm-Leach-Bliley law more accessible and user
friendly. It would also ensure clear lines of authority and accountability. And the process
would be efficient enough to ensure the timely delivery of policy and consumer
protection decisions on a consistent basis across the entire financial sector."
A copy of Chairman Powell's speech is attached.