Comment Letter to the U.S. Treasury Department Concerning the Regulatory Structure for Financial Institutions

This comment letter was submitted to the U.S. Treasury Department in connection with that Department's review of proposals for changes in the regulatory structure for financial institutions. The comment letter presents the following policy recommendations: (1) the thrift charter should be eliminated, existing thrifts should be required to convert into banks, and the Office of Thrift Supervision should be merged with the Office of the Comptroller of the Currency (OCC); (2) the dual banking system should be preserved and strengthened in order to promote innovation in banking regulation and to support the community bank sector; (3) at least one federal agency that is separate and independent from the OCC should be designated as the primary federal regulator for state-chartered banks; (4) the existing statutory limits on bank mergers and acquisitions should be maintained, including the 10% nationwide deposit cap and the 30% statewide deposit cap; (5) greater scrutiny and special conditions should be required for large bank mergers; (6) Congress should establish federal consumer protection standards for all home mortgage lenders, credit card lenders, and other providers of consumer credit; (7) Congress should prohibit the OCC from issuing regulations that preempt state law, except in specific areas where Congress has given the OCC explicit authority to adopt preemptive rules; (8) Congress should establish a separate and independent federal authority to enforce federal consumer protection laws against all providers of financial services, including national banks; (9) Congress should recognize the authority of state attorneys general to enforce applicable state laws against all financial service providers, including national banks, (10) Congress should provide the Federal Reserve Board (FRB) with direct oversight over all significant financial conglomerates that control FDIC-insured banks; (11) Congress should prohibit the FDIC's deposit insurance fund from making any payments to uninsured depositors or other uninsured claimants; and (12) all responsibility for protecting uninsured creditors of too big to fail (TBTF) financial institutions should be assigned to the FRB, and the FRB should impose assessments on significant financial conglomerates to recover the FRB's cost of providing financial assistance to TBTF institutions