A major issue impeding enactment of financial modernization legislation involves regulatory turf. The Federal Reserve argues that any company owning a bank should be subject to supervision by an "umbrella" regulator. The Fed, to no one's surprise, is the Fed's candidate to be the umbrella regulator.

Nonbanking companies and other regulators see little need for an umbrella regulator and, in any event, don't want the Fed in that role. Banks, already subject to the Fed's jurisdiction, have to be more polite but are also troubled by the notion.

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