With Senate Banking Committee Chairman Chris Dodd's draft regulatory reform legislation to consolidate banking supervision expected to emerge soon, House Financial Services Committee Chairman Barney Frank suggested there might be some room to nudge his approach closer to the Senate's.

Speaking at a policy conference in Washington Friday, Frank reiterated his stance that he opposes a single regulator because he wants to maintain the dual banking system and let the Federal Deposit Insurance Corp. keep its supervision of most state-chartered banks.

But he said that he would be open to perhaps ceding some more authority from the Federal Reserve Board and giving it to a revamped national bank supervisor.

"Chris is talking about tradeoffs between the Fed and the national bank supervisor," he said. "That's something that will have to be discussed but I don't see any diminution in authority for the FDIC. There is a distinction between [the Fed] and the FDIC. We are shuffling some back and forth between the Fed."

Frank's plan calls for merging the Office of the Comptroller of the Currency and the Office of Thrift Supervision. It would cull the Fed's consumer protection powers but make the central bank the systemic risk regulator.

Dodd's approach is expected to consolidate all bank supervisory powers — including the Fed's and the FDIC's — into a revamped OCC. It would let the banking regulators jointly serve as the systemic risk regulator headed by either the Treasury Department or a presidential appointee.

One of the key controversies in the debate is how much power to entrust to the Fed. Frank defended his plan for giving less to the central bank than what the administration is seeking.

"We are going to cut back some on what the Fed has in the administration's bill, in terms of the backup authority on the exchanges and clearing houses and on the right to override the other regulators," he said. "About this single regulator, Chris's proposal to take some authority from the Fed — we'll look at it. I don't think that's a red line. I think taking from the FDIC is."

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