CHICAGO - Federal Reserve Board Chairman Alan Greenspan called for a single regulator with authority to oversee an entire financial institution, including banking and nonbanking affiliates.

"Someone must be responsible for assessing how the behavior of the entire organization, viewed as an organic whole, is consistent with our supervisory goals," Mr. Greenspan said Thursday at the Chicago Fed's annual banking conference.

"Indeed, most industrial nations now subscribe to the need for consolidated banking supervision," he added.

This "umbrella supervisor" must monitor the risk that nonbank affiliates, including those engaged in underwriting activities, pose to a bank, he said.

The Fed chairman said the umbrella regulator must have the power to intervene to protect the insurance fund and the financial system, but should be careful not to add costly new regulatory burdens on banks.

The question of what kind of regulator diversified banking organizations need takes on particular importance as Congress considers whether to repeal the Glass-Steagall Act and permit combinations of banks and securities houses.

House Banking Committee Chairman Jim Leach, R-Iowa, wants the Fed to supervise such combinations, but the Clinton administration has proposed a system of functional regulation in which no one agency would oversee the entire organization.

At the Chicago conference, however, Assistant Treasury Secretary Richard S. Carnell proposed that a bank's primary regulator could oversee the entire institution.

"Why create a separate regulator?" he asked.

Mr. Greenspan did not say which agency he thought should oversee diversified organizations, but Fed Vice Chairman Alan Blinder has previously volunteered the central bank for that role.

Mr. Greenspan also reiterated his support for Glass-Steagall repeal, saying it would improve competition and increase the efficiency of the financial services industry.

"All of these effects would provide real benefits to both financial customers and most financial institutions, and for these reasons alone Glass-Steagall should be repealed as soon as possible," Mr. Greenspan said.

The House Banking Committee approved Glass-Steagall reform last week. The Senate is expected to consider it later this summer.

Repeal is the "next logical step" in the industry's evolution to a more unified system, he said. But, it also is not as radical as some observers believe. Banks already are engaging in securities work, he said.

Mr. Greenspan deflected a question on whether Congress should go a step further and eliminate the barriers between banking and commerce, saying that debate should wait until the industry has experience with financial services holding companies.

Mr. Greenspan also endorsed several pending bills to streamline the bank holding company application process. The bills would exempt "well- capitalized" institutions from the application process altogether provided the Fed has previously approved similar deals.

The bills also make it easier for the Fed to evaluate whether new banking activities are allowed, he said.

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