WASHINGTON -- The American Bankers Association and America's Community Bankers wrote a joint letter to Treasury advocating for maintaining a separate Office of the Comptroller of the Currency and Office of Thrift Supervision at Treasury.

Treasury Secretary Henry Paulson recently announced that he would be looking to create some efficiencies among the banking regulators late last month. A Wall Street Journal article cited the possible combination of the bank and thrift regulatory agencies. It also said that Paulson has called the British single regulator model for financial services "interesting", but probably not appropriate for the United States.

The groups commended Treasury for its work toward efficiency and wanted to work with the department in that direction. The letter read, "We are also eager to work with Treasury to modernize our financial regulatory structure. Successful enactment of a modern program of supervision for the housing government sponsored enterprises would be a good, concrete step in that effort."

However, Treasury's June 27 announcement has stirred speculation of a merger of the regulators, the letter noted. While ABA and ACB said they appreciated that Treasury was going to approach the process "with an open mind" the groups still expressed their strong opposition to a merger of the regulators.

"We believe any such plan would ultimately fail as it has in the past. We fear, however, that pursuit of such a plan could sidetrack more direct efforts that could improve our financial

system," ABA and ACB wrote.

Ironically, the two banking trade associations just announced a merger agreement late last month.

The letter, signed by ABA Chairman Earl McVicker and ACB Chairman Mark E. Macomber, said, "We agree wholeheartedly with you that the competitiveness of the U.S. financial markets is paramount. We believe that a merger of the banking agencies would not further the goal of financial competitiveness. We believe it would, in reality, decrease the competitiveness of the U.S. banking system by negatively impacting true charter choice and the innovation and flexibility that charter choice provides, a unique competitive advantage enjoyed by the American banking system."

It concluded, "We believe a Treasury focus on greater cooperation and communication among the existing banking agencies, together with a productive effort to streamline regulation to reduce burden, is the best way to enhance the competitiveness of our

entire industry."

In related matters, the Financial Services Regulatory Relief Act signed into law last year required a study of regulatory consolidation

now underway.

NCUA actually started life in 1934 as the Federal Credit Union Division of the Farm Credit Administration, according to the agency's 1999 Annual Report. Then in 1942, supervision transferred to the FDIC. By 1948, the Bureau of Federal Credit Unions was under the Federal Security Administration. The Bureau became part of the Department of Health, Education and Welfare in 1952 until 1970 when it became an independent agency. The three-member board structure was adopted in 1979.

So does consolidation talk have NCUA nervous? "We have not been made aware of any discussions on the merging of NCUA with any other part of the federal government," NCUA Director of Public and Congressional Affairs John McKechnie said.

In a pre-emptive move, NAFCU Senior Vice President of Government Affairs Dan Berger said, "We have had conversations with Treasury officials and the Administration as late as last week voicing our opposition to the NCUA being part of any regulatory consolidation plans."

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