AUSTIN - Texas legislators are studying the idea of merging the state's bank, thrift, credit union, and consumer credit supervisors into a single agency.
House Speaker Tom Craddick, R-Midland, asked the House Financial Institutions Committee to look into the issue before the Legislature convenes in January. The goal is to make the state's government more efficient.
In testimony last week, the regulators said that consolidation would not save taxpayers money, because all the departments are self-funded. Several of the commissioners also said that they believe thrifts, credit unions, and other entities would prefer that the agencies remain separate.
Legislators have looked at consolidating the Texas Banking Department, the Texas Department of Savings and Mortgage Lenders, the Office of the Consumer Credit Commissioner, and the Texas Credit Union Department periodically since the bank, thrift, and credit union regulators were separated in the 1960s.
A bill to merge the agencies was introduced last year but never made it out of committee.
This is an off year for the Texas Legislature, which meets every two years, but committees periodically hold hearings on issues that could require legislation in future sessions.
The Financial Institutions Committee is accepting written comment on the consolidation issue through July 15.
John Ryan, the executive vice president of Conference of State Bank Supervisors, said regulatory consolidation has been a national trend for several years. This year Missouri consolidated its credit union and banking departments.
"Texas, to the best of my knowledge, is the only state that has a separate savings and loan regulator, and in the vast majority of states the banking department also supervises the credit unions and mortgage lenders," he said.
The Texas Department of Banking regulates about 330 commercial banks, along with cemeteries, funeral homes, and money-services businesses. The Department of Savings and Mortgage Lenders regulates the state's 22 thrifts and more than 24,000 licensed mortgage brokers.
The Office of Consumer Credit regulates consumer finance firms and individual lenders. The Credit Union Department regulates 223 state-chartered credit unions.
Proponents of keeping the regulators separate say Texas is simply too big and has too many financial services companies for one agency to oversee.
Sam Kelley, the state's consumer credit commissioner from 1970 to 1985, has testified many times against consolidation over the years. In an interview last week, he said his feelings have not changed.
"You hear, 'If it ain't broke, don't fix it,' but I say, if it ain't broke, don't break it," he said.
The Independent Bankers Association of Texas and the Texas Mortgage Bankers Association have taken a neutral stance on the issue, but other trade groups oppose consolidation.
Eric Sandberg, the president of the Texas Savings and Community Bankers Association, said it strongly believes that state savings banks should have their own regulator, because of cultural differences between banks and savings banks.
His group is merging with the Texas Bankers Association on July 1, and he said a condition of the merger agreement is that the combined group will oppose any regulatory consolidation.
If the regulators were merged, Mr. Sandberg predicted, most of the 22 state-chartered savings banks would switch to federal thrift charters.
The Texas Consumer Finance Association has not taken a vote to determine its position, but Gaylord Armstrong, the group's general counsel, said keeping the regulators separate is in his clients' best interests.
"I think when you compare our system to the system in other states, it is very efficient and professional, and you don't hear of scandals. … Ours is a much preferable system," he said. "Why is it we should consolidate?"
Credit Union Commissioner Harold Feeney has experience as a consolidated regulator. As superintendent of the Arizona State Banking Department, he oversaw 17 financial groups.
"That's a lot of statutes and rules to keep up on," Mr. Feeney said in an interview. He prefers the Texas system. "Here you can focus in on very specific issues and institutions, versus having to be a generalist about all of them."
The IBAT has taken a neutral stance on consolidation since it allowed savings banks to become members several years ago, but Steve Scurlock, executive vice president of the group, said his personal opinion is that the agencies should be reorganized.
"The way it is structured now, I think, could be done more efficiently," he said. "It's nothing to do with consolidation - just dividing along the business lines."
