WASHINGTON — Former Federal Reserve Board Chairman Paul Volcker laid out the framework Friday for a proposal to consolidate many of the duties of the various financial regulatory authorities, a move that he said would improve oversight and financial stability.

Speaking at the George Washington University event on the Fed, Volcker said his think tank, the Volcker Alliance, has been working on a pending white paper that analyzes more than 20 concerted efforts to reform the financial regulatory structure over the past century. Those proposals — which include reports from the White House, Congress and the private sector — all call for some measure of consolidation, and "not one had any particular impact on actual structure of the system," Volcker said.

"I don't want to accept the conclusion that's so widely held that we can't do anything about it," Volcker said. "It should be ripe for action, and we are not entirely alone" in believing that structural reform is appropriate, he said.

The outlines of his proposal included altering the structure of the Financial Stability Oversight Council so that the Treasury secretary would continue to chair the regulatory committee but would no longer have a vote. The council, in turn, would be given veto authority over specific regulatory actions, giving it an explicit check on member agencies.

He also called for significant revamping of the existing financial regulators into a system more like the one in the United Kingdom. Under Volcker's plan, the government would effectively split off supervision and compliance from rulemaking and policy development.

As a result, the supervision and compliance duties of the Fed, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Securities and Exchange Commission and Commodity Futures Trading Commission would be consolidated into a single new agency focused on financial supervision. Volcker acknowledged his plan was based on the British one, where the Financial Conduct Authority examines and ensures compliance for U.K. financial institutions.

The SEC, CFTC and Fed, meanwhile, would continue to exist as separate entities in charge of rulemaking. The SEC and CFTC would oversee the securities and commodities markets, while the Fed would inherit the rulemaking powers of the FDIC and OCC.

Volcker acknowledged that the tenor of the debate concerning regulatory reform has centered around changes to the Dodd-Frank Act rather than the structure of the regulatory system as a whole and that many consider structural reform "impossible." He pointed to the Bipartisan Policy Center as a laudable starting point, but said that in that report, "the idea of wholesale revamping of the regulatory structure was rejected — with good reason, as big a legislative burden as it was."

The challenge, Volcker said, was that a majority of the activities that had been almost exclusively confined to the banking sector when he was leading the Fed are largely dispersed throughout the financial system. Moreover, the banks that remain the biggest players have expanded far beyond the province of any single regulator.

That balkanization leaves the regulatory system ill-equipped to manage the biggest banks' size and complexity or oversee similar systemically risky activities. Bank executives, meanwhile, have taken advantage of that balkanization to assume risk without any consequences to themselves or their businesses.

"I think it's demonstrable that, when I say modestly, that those banks are difficult to manage, and I think you could say are impossible to manage effectively," Volcker said. "Without question," those banks are "infused with enormous conflicts of interest, and … have adopted compensation practices that frankly challenge any practical application of the old-fashioned idea of fiduciary responsibility."

Volcker also acknowledged that getting Congress to pass a major structural financial reform bill is a heavy lift. The Republican-controlled Congress, he said, appears more interested in passing small measures aimed at rolling back the existing Dodd-Frank regulatory structure — measures pushed by lobbyists, whom he likened to "termites constantly eating away at rickety structure of financial system." But he said the problems are nonetheless structural and require a bold solution. The solutions he is putting forth are not inherently partisan and deserve a fair hearing, he said.

"I recognize that the political climate is not exactly conducive to any major legislation, but I keep arguing that this is a challenge and a piece of legislation … that is undoubtedly complicated," Volcker said. "It's major, but it's not, I don't think, rife with the kind of ideological issues that doom it to failure from the start."

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