In her new book, former FDIC chief Sheila Bair raises a good point. With the disasterous results from the government’s housing plan, dyfunction handling of the banks by the regulators and federal agencies, and the continue abuse by the banks, who should regulate the banks better and equally protect the banks and consumers’ interest: FDIC or OCC. Keep in mind that FDIC was created by theGlass–Steagall Act of 1933 as an independent agency. OCC, too, is an independent agency but an agency under the US Treasury. Here is what Bair had to say about OCC:
4. The OCC should be abolished
Time and again, Bair portrays the Office of the Comptroller of the Currency as far too close to the banks it regulates. She said she was alarmed by efforts from then Senate Banking Committee Chairman Chris Dodd in 2009 to consolidate regulators into a single banking agency. While Dodd intended to eliminate the OCC, Bair says it instead would have empowered it. It also would have addressed the wrong problem, she says.
“Our three biggest problem institutions among insured banks—Citigroup, Wachovia, and Wamu—had not shopped for charters; they had been with the same regulator for decades,” she writes. “The problem was that their regulators did not have enough independence from them. Consolidating all of the power with the OCC, the weakest regulator along with the OTS, would make things worse, not better.”
The solution, she says, is to do away with the OCC altogether, putting all bank supervision with the FDIC—and leaving holding company supervision with the Fed.
“Let’s face it, the OCC has failed miserably in its mandate of ensuring the safety and soundness of the national banks it regulates.”