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The Banker’s Advocate
lator under Senator
State Bank Department
imity to and knowledge of
Dodd’s proposal.
the entities we regulate,
VIEW
As Bank Commissioner,
the local economic condi-
it is my job to ensure this
Continued from Page 1
tions and
office makes good deci-
consumers,
plans to propose legisla-
sions. They have to be
states are of-
tion that would create a
good. The 100 banks my
ten the first
single federal “super”
staff supervise finance
to identify
regulator.
economic growth and job
The creation of such a
creation throughout Ar-
Smith
emerging
trends, prac-
“monolithic” regulator as
kansas, and manage $40
tices, products or threats
a means to improve bank
billion in assets.
that impact the financial
supervision is supported
Christopher Dodd
I often confer with my
system,” Smith stated.
by a faulty assumption –
colleagues at the FDIC
Regulatory reform of
that regulatory consolida-
Community banks have
and Federal Reserve when
financial services is war-
tion would result in a
been the bedrock of di-
making an important deci-
ranted, given the cascading
stronger and safer banking
versity in our financial
sion. I solicit their view-
turmoil in the economy
system.
system, and this diversity
points to draw on their
brought on primarily by
The opposite result is
has been a key to the resil-
perspective as fellow su-
unsound mortgage lend-
likely.
ience and stability of the
pervisors of state-
ing. Community banks in
A monolithic regulator
system.
chartered banks.
Arkansas and around the
would weaken the system
It is likely a single fed-
Collaboration among
country did not cause the
by increasing industry
eral regulator would focus
multiple regulators with a
upheaval and their regula-
consolidation.
its attention on the largest
diversity of experience,
tion during this time
This federal agency
and most complex regu-
opinions and resources
should serve as the model
could exert a concentra-
lated entities. Commu-
improves the quality of
– not the victim – of re-
tion of authority and use a
nity banks would be de-
bank supervision. Better
form.
“one size fits all” ap-
nied the ability to be flexi-
supervision, in turn, pro-
Certainly, one of the
proach that would disad-
ble and to innovate re-
motes sounder financial
lessons to be learned from
vantage smaller, locally
sponsibly to meet local
institutions able to meet
these events is that bigger
owned banks, forcing
needs.
the needs of their custom-
does not always mean bet-
them to sell to large insti-
Furthermore, I believe
ers. Sound financial insti-
ter when it comes to both
tutions based far from
this “single regulator”
tutions build stronger
financial institutions and
their customers.
model would lower the
communities.
their regulators.
It seems to me that this
quality of bank supervi-
State bank regulators,
The product of bank
prospective outcome
sion – not raise it, which
with their “homegrown”
regulatory reform should
would only increase sys-
is one of the goals of
understanding of local
be a system that is nimble
temic risk, while a key
comprehensive financial
communities and prox-
and well equipped to re-
objective of any financial
regulatory reform.
imity to the banks they
spond to the conditions
regulatory reform pro-
The benefits of the dual
supervise, likely would
and needs that are unique
posal is to reduce systemic
banking system and struc-
lose their important role
to each community. A
risk.
ture of multiple regulators
in a structure dominated
new regulatory structure
If you’re an Arkansas
– the checks and balances
by a single federal regula-
should encourage deci-
banker who shares my
that temper concentrated
tor.
sions that are pushed
concerns on this issue, I
authority, and the syner-
Joseph A. Smith Jr.,
down to the often better
urge you to communicate
gism produced by collabo-
Commissioner of Banks in
informed, more respon-
them to our congressional
ration and joint problem
North Carolina and chair-
sive local level, not made
delegation. Your two ma-
solving – would be lost.
man of the Conference of
in a vacuum by an agency
jor trade associations both
I rely on the Federal
State Bank Supervisors,
with unchecked authority.
oppose the creation of a
Deposit Insurance Corpo-
touched on this point in
The system should re-
single federal regulator
ration and Federal Re-
recent testimony to the
sult in smarter regulation,
and support the dual
serve, independent agen-
House Financial Services
healthier financial institu-
banking system and char-
cies that would be merged
Committee.
tions and prosperous com-
ter choice.
into a single federal regu-
“Because of our prox-
munities across America.
September 30, 2009
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