The spat between banking regulators and the Securities and Exchange Commission over loan-loss reserves has outraged bankers, who argue that securities regulators have no business interfering in a safety-and- soundness issue.

Yet several experts said such conflicts are actually healthy for the industry, and that the cure-a super-regulator with nearly unlimited authority-would be worse than the problem.

Under the current system, each regulatory agency has its own mandate. As a result, they are more focused and able to implement policy more consistently than a single, jack-of-all-trades supervisor.

"I'm of the creative-conflict school," said Karen Shaw Petrou, president of the industry consulting firm ISD/Shaw Inc. "It makes more sense than having a banking czar."

"Often the conflict in the airing of policy results in a better approach because it blunts zealousness," said David W. Roderer, a partner in the Washington office of the law firm Goodwin, Procter & Hoar. "That is what we saw here in the loan-loss issue."

It is just one of many instances in which government agencies with differing agendas have imposed conflicting requirements on the industry.

"We have regulated institutions that get told one thing on fair-lending by banking regulators and another thing by the Department of Justice," said William J. Sweet, a partner in the Washington office of Skadden, Arps, Slate, Meagher & Flom. "Things like this happen all the time, and yet our system seems to survive."

The phenomenon is not limited to banking. Mr. Sweet said the Commerce Department tries to encourage overseas high technology sales while the Defense Department tries to limit them. Such tensions were even endorsed by the country's forefathers, who imposed checks and balances on the three branches of government.

"This is a result of our division of authority under the Constitution," he said. "It generally works, but not always."

A superregulator is needed only when the conflicting mandates of regulators are such that they significantly disrupt an industry, Mr. Roderer said.

"Are the problems so great to require a true dictatorial regime? I don't think so," he said. "For the most part, the agencies are able to work out their differences, even if it is occasionally a bit bloody."

Still, the chance of conflict is likely to increase. Financial reform legislation endorsed by much of the industry would give significantly more regulators authority over chunks of a bank's business. For instance, the latest reform plan would give state insurance commissioners authority to regulate some aspects of bank insurance sales, whereas the SEC would gain more power to monitor bank securities activities.

"It is an extremely imperfect system," Ms. Petrou conceded. But it beats the alternative, she said. "Perfection eludes us all."

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