Federal Reserve Chairman Alan Greenspan frequently asserts that banks receive a deposit insurance subsidy. Therefore, he contends, they should exercise expanded powers only through a holding company regulated by the Fed.

In fact, there is no such subsidy nor are banks otherwise subsidized by a federal safety net. This assertion is merely part of the Fed's effort to protect its regulatory turf against the Office of the Comptroller of the Currency, the Securities and Exchange Commission, and state insurance departments and to advance itself as the umbrella supervisor of the financial system.

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