“Such dogma props up bureaucracies that maintain the separation and serves the interest of the status quo without regard to why the separation exists in the first place or whether the separation has any usefulness for today's economy,” Noreika said.

Allowing tie-ups could enable Amazon.com Inc., Facebook Inc. and Wal-Mart Stores Inc. to get into the businesses of lending and financing that have long been dominated by companies like JPMorgan Chase & Co. and Goldman Sachs Group Inc. And there are already real-world examples of Goldman and Morgan Stanley using special exceptions to dabble in commodities industries, subjecting them to criticism from lawmakers and extra attention from regulators.

Though the OCC could get the ball rolling on allowing lenders into commerce by opening up bank chartering to financial technology firms, a true overhaul would take action by lawmakers.

As Noreika points out, the separation — which has roots in the 18th century — is meant to “protect banks from the corruptive power of commercial ownership and protect the market from banks consolidating and wielding too much commercial power.” He contends that it reflects obsolete thinking and that its motivations were never pure. The modern version was aided by “the Rockefellers wanting to stick it to the Morgans” by advocating bank regulation in the 1930s, he said.

Policy makers are unlikely to take up Noreika's proposal, because there remain deep worries that companies would use their banking operations to provide risky financing to in-house businesses, said Guy Moszkowski, a banking analyst at Autonomous Research.

“There has been concern, historically, that for banks owned by corporate enterprises there would be excessive lending into the corporate enterprise and its subsidiaries,” he said. “I suppose there are ways to control for that. But I think the fear has generally been that if you allow corporates to control banks, they'll find ways around those prohibitions.”

Retailers Stymied

Retailers have previously been stymied in their efforts to get into banking. When Congress passed the Gramm-Leach-Bliley Act in 1999, it prohibited regulators from approving certain thrift applications that had been submitted by companies including Wal-Mart. Gramm-Leach-Bliley is better known for repealing the Glass-Steagall Act, the Depression-era law that separated investment and commercial banking.

In 2005, Wal-Mart tried again. The company filed an application with the Federal Deposit Insurance Corp. to open what's known as an industrial bank in Utah that would have allowed it to process credit card transactions without going through an outside financial firm.

Banks aggressively lobbied against Wal-Mart's submission, arguing that the retailer would use it as a stepping stone to opening branches in its litany of stores and eventually dominating the industry. Amid the controversy, Wal-Mart pulled its application in 2007.

In recent years, bankers have been increasingly fretting that technology companies will disrupt their business. Speaking at the same conference as Noreika, U.S. Bancorp Chief Executive Officer Andy Cecere said Tuesday that tech firms have several advantages, including strong funding and familiarity with their users.

“That is something that we all have to be very cognizant of and make sure we don't lose our place in that relationship,” Cecere said.

'Significant Threat'

Almost half of banks and credit unions consider large tech companies such as Alphabet Inc.'s Google, Facebook and Apple Inc. to be a “significant threat,” according to a Infosys Finacle survey of 300 bankers released Wednesday.

In China, tech companies such as Alibaba Group Holdings Ltd. and Tencent Holdings Ltd. have already emerged as serious competitors to banks in offering online financial services.

Among Noreika's arguments is that data from crises don't bear out the dangers of commerce-tied institutions. He cited a study of thrifts during the savings-and-loan crisis, and also referred to the 2008 financial crisis demonstrating “there is nothing inherently safer about separating banking and commerce or traditional banking and investment banking.” Noreika is serving until President Donald Trump's comptroller nominee Joseph Otting is confirmed by the Senate.

Noreika added that bank regulators can continue keeping the bank part of the business safe while the new financial entities spur competition, said Noreika. Small banks might find easier sources of local capital by tying themselves to other businesses, Noreika said, who was a lawyer for big banks before taking the government role. He plans to return to the private sector after leaving the OCC.

And here's a line to give Wall Street pause: “If a commercial company can deliver banking services better than existing banks, we hurt consumers by making it hard for them to do so.”

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