The Tortured History of Reg Restructuring Proposals

Franklin D. Roosevelt

Following the wreckage of the Great Depression, President Franklin D. Roosevelt asked the Brookings Institute to examine ways to improve the government. Among the recommendations was a suggestion that the Federal Deposit Insurance Corp. become the only regulator in charge of bank supervision. The plan would have eliminated the Office of the Comptroller of the Currency and stripped the Federal Reserve Board of direct oversight of banks.

Harry S. Truman

A decade later, President Harry Truman created the Hoover Commission, which went in the opposite direction of Roosevelt's plan. The commission included multiple task force recommendations, including one to transfer the FDIC to the Fed, another to transfer the OCC to the Fed and a third that would have transferred both to the Fed. Ultimately, the commission recommended that the FDIC become a part of the Treasury Department.

John F. Kennedy

In 1961, the Commission on Money and Credit proposed folding the OCC into the Fed. But a year later, the Advisory Committee on Banking to the Comptroller of the Currency sought to eliminate the Fed's direct power over banks and make the FDIC a part of the Treasury Department. The Comptroller Committee also called for transferring the Fed's authority to set margin requirements and deposit interest rates to the Treasury. By 1965, House Banking Committee Chairman Wright Patman took that idea one step further, calling for consolidation of all federal banking regulators under Treasury.

Richard Nixon

The Hunt Commission, formed by President Nixon, returned to the idea of taking the Fed out of bank regulation. But in an interesting twist, it called for the creation of three new independent agencies. It would have removed the OCC from its current position under Treasury to form the National Bank Administrator. The Administrator of State Banks, meanwhile, would have assumed the supervisory functions of the FDIC and Fed, while the Federal Deposit Guarantee Administration would have merged the FDIC, National Credit Union Administration and the Federal Savings and Loan Insurance Corp.

Ronald Reagan

In 1982, President Reagan created the task Group on Regulation of Financial Services. Chaired by Vice President George H.W. Bush, the group discussed all sorts of things routinely talked about now, including citing the lack of coordination among the agencies. Its proposed solution was to create a new "Federal Banking Agency," within Treasury, essentially an upgraded OCC. The plan would have given all federal oversight of state-chartered banks to the Fed, while national banks would be overseen by the new agency.

Bill Clinton

In 1994, lawmakers in both the House and the Senate introduced a regulatory reform bill that was backed by the Clinton administration. It would have merged the OCC and OTS into a single agency called the Federal Banking Commission. That agency would have also absorbed the FDIC's and Fed's banking supervisory powers.

The plan understandably drew objections from the Fed. On Jan. 4, 1994, Fed Gov. John LaWare published in American Banker a counterproposal in which the central bank would have kept oversight of bank holding companies, foreign banks and all state banks. The FBC would have had authority over national banks and all thrifts.

(Image: Bloomberg News)

George W. Bush

As the nation slid into financial crisis, Treasury Secretary Henry Paulson in 2008 unveiled a blueprint to redesign the system around three regulators: a souped-up Fed to oversee bank holding companies, a safety-and-soundness agency to regulate subsidiaries and a "business-conduct" regulator to monitor conduct across all firms.

(Image: Bloomberg News)

Christopher Dodd

In late 2009, Sen. Chris Dodd bucked conventional wisdom by introducing a reform proposal that was "so far-reaching it would pick a fight with virtually every entrenched interest involved in the debate, including community banks, large financial institutions, the Obama administration, House Democrats, the FDIC and the Fed," according to American Banker at the time.

The original bill would have stripped the Fed and FDIC of bank supervisory responsibilities and given them to a super-powered OCC. Although Dodd's bill eventually became the Dodd-Frank Act, those restructuring proposals proved unpopular and were struck from the bill.

(Image: Bloomberg News)

Paul Volcker

Volcker and his think tank outlined a new proposal on April 20 that borrows liberally from efforts in the past while still going its own direction. It would make the U.S. system closer to the United Kingdom's, separating out the policymaking and supervisory functions. It would effectively create a single super regulator that examines all financial institutions. Under the plan, the Fed would write rules for all banks but be limited to back-up supervision, while the FDIC would become solely the deposit insurer and the OCC would be eliminated.

(Image: Bloomberg News)