Calling current regulation of the banking industry "duplicative, inefficient, and costly," House Banking Committee Chairman Henry B. Gonzalez proposed a bill in March to combine the five federal regulatory agencies into one - now commonly called the superregulator.

The Regulatory Consolidation Act of 1993 would consolidate the regulatory functions of the Office of the Comptroller of the Currency, the Federal Deposit. Insurance Corp., the Federal reserve, and the Office of Thrift Supervision into a Federal Banking Commission.

The new body would oversee all federally insured financial institutions except credit unions.

Dual System in Jeopardy?

Although the Texas Democrat's bill does not call for consolidation on the state level, many community bankers have viewed it as a threat to the dual federal-state banking system.

The Conference of State Bank Supervisors opposes the bill, fearing that reducing regulatory requirements at the federal level would make state banking regulation seem more burdensome, said Ellen Lamb, the conference spokeswoman.

Ms. Lamb also cited worries that merging the responsibilities of federal insurers and state chartering agencies would result in the neglect of some functions.

"The savings and loan crisis shows the problems of only one regulator looking after the interests of both deposit insurer and chartering authority," she said.

Independence Sought

To avert another debacle, however, Rep. Gonzalez specified that the superregulator be independent of the Treasury Department, and therefore shielded from political pressure.

Advocates and opponents of the bill agree that reducing regulation could free billions of dollars in credit. But whether a superregulator can trigger the flow remains a bone of contention.

"Less regulation is a good idea, but consolidation doesn't necessarily lead to less regulation," said Margie Muller, state bank commissioner for Maryland. "It just limits the source."

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