Re: "OCC Curry Offers 'Blunt' Advice to State Regulators" (May 14, 2014)

In his recent speech before the Conference of State Bank Supervisors, Comptroller of the Currency Thomas Curry expressed concerns about the potential lack of adequate funding for state bank regulators and the risk of state regulators becoming too dependent on shared examinations with federal supervisors. His fear is that such a development could result in states ceding responsibility to the federal agencies and thus undermine the very real benefits of our dual banking system. His concern is well founded.

As a former state bank regulator, I strongly agree with Curry's worry that state budgetary constraints or charter conversions can reduce resources available to state agencies. Curry states that if sufficient resources were not available to perform quality oversight when he was a state banking commissioner, he would have "closed up the shop" or sought a regional supervisory compact before ceding authority to federal regulators.

However, state fiscal and budgetary issues are a reality. So is the risk of loss of state assessments due to charter conversions or mergers. 

Fortunately, this very concern was addressed in a recent Bipartisan Policy Center report entitled "Dodd-Frank's Missed Opportunity: A Road Map for a More Effective Regulatory Architecture." In the report, co-chaired by myself and Mark Olson, we propose an innovative pilot program that would allow states to participate in a consolidated exam force, giving them more access to federal resources without relinquishing authority to federal regulators. The proposal would preserve the dual banking system while bringing about greater coordination and more efficient use of both state and federal resources.

Richard H. Neiman is co-chair of the regulatory architecture task force within the Bipartisan Policy Center's financial regulatory reform initiative and a former New York State Superintendent of Banks.