SCHUMER TO TREASURY: HANG TOUGH ON PLANS TO CONSOLIDATE PATCHWORK OF BANK OVERSEERS INTO SINGLE REGULATOR
June 12, 2009

In Letter To Geithner, Schumer Encourages Administration Not To Give In To Perceived Political Pressure Against Aggressive Reforms

Senator Also Urges Administration To Consider Making Fed Systemic Risk Regulator; Says SEC-CFTC Merger Has Merit

WASHINGTON, DC—As the Obama administration prepares to submit to Congress its recommendations for reforming the financial regulatory system, U.S. Senator Charles E. Schumer (D-NY) released a letter Friday encouraging Treasury Secretary Timothy Geithner not to abandon plans to consolidate the patchwork of bodies overseeing the banking industry into a single, prudential regulator.

“It does not make sense for up to four different federal regulatory bodies to retain oversight over the safety and soundness of banks and bank holding companies in the United States. Retaining multiple regulatory entities preserves the regulatory arbitrage that allows institutions to pick the oversight scheme that benefits them the most, often at the expense of consumers and the health of the system overall,” Schumer wrote.

The letter comes in the wake of reports that, in the face of an anticipated political backlash from Capitol Hill, administration officials are considering softening some of their more aggressive proposals. Schumer said the administration should not let pass a “once-in-a-lifetime” opportunity to dramatically reshape the “alphabet soup of regulators.”
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