The governor of Wisconsin is working to merge the state's financial services regulators.

His proposal, which has been projected to save $900,000 a year, would create a Department of Financial Institutions to be headed by a cabinet- level secretary.

As many states do, Wisconsin wants its regulators to recognize the blurring distinctions among financial service providers and use staff and resources more effectively.

"It looks like it's a step in the right direction," said John Thomson, president and chief executive officer of $50 million-asset Bank of New Glarus. "Clearly, anybody with a warm forehead can see government is going to contract. We're going to have to get more efficient."

The proposed department, part of a sweeping government reorganization in Gov. Tommy Thompson's biennial budget, would debut July 1, 1996, if approved by the Legislature.

"There's considerable potential to achieve staff and cost savings by co- locating these agencies," said Richard Dean, the state bank commissioner, who does not know what role he might play in such a structure.

The proposed superagency would regulate 15,412 institutions, including broker-dealers, mutual funds, and credit unions. In addition, it would oversee 60,600 people who sell securities or investment advice.

The consolidation's cost savings are expected to include eliminating about 20 jobs, although many of those posts already are vacant.

The department would have divisions encompassing currently independent agencies, including the Office of the Commissioner of Banking, Office of the Commissioner of Savings and Loan, the Office of the Commissioner of Securities, and the regulation of mortgage banking in the Department of Regulation and Licensing.

The inclusion of securities regulation in the new structure anticipates change in the federal Glass-Steagall law, said Helge Christensen, president of Bankers Bank, Madison, Wis.

The financial institutions department also would handle the state's Uniform Commercial Code program.

Further, the Office of the Commissioner of Credit Unions would become a division for administrative purposes but retain an autonomous director to provide regulatory oversight of credit unions, said Thomas Maday, state credit union commissioner.

Although credit unions appear to get more autonomy than banks and thrifts under the plan, combining administrative functions "is the first step to bringing them under the umbrella" with taxpaying financial institutions, Mr. Christensen said.

Many states already have combined financial services departments, said Ellen Lamb, assistant vice president of the Conference of State Bank Supervisors.

For example, 35 states' commercial banks and thrifts are regulated by a single department, and 28 states have departments that include banks, thrifts, and credit unions, she said.

Several other states are considering changes, she said.

"At the state level as well as the federal level, everybody is asking what the most efficient way to structure your regulatory agencies is," she said.

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