Making sense of the ‘crazy quilt’ of financial regulators
Caitlin Mullen Senior Reporter
As the U.S. bank regulatory system has grown throughout history, so have calls to simplify it. Bank of America CEO Brian Moynihan this year lamented “the spaghetti chart of overlap” among bank regulators and reiterated suggestions from big-bank executives that it’s time to “start with a fresh sheet of paper.” …It’s an issue that can pit large banks against small: Bigger banks tend to be annoyed by the plethora of regulators, but smaller banks like the choice, Hsu said. “It does feel like Hamilton versus Jefferson,” he said during a June Brookings event. “That tension’s always been there.” And the resources required to stay on top of such a large and complicated banking system demand a sizable apparatus. There’s a comfort factor, too: Consolidation attempts fail “because individual institutions want things the way they are,” said Karen Petrou, managing partner at Federal Financial Analytics. There are, to some degree, captive regulators “everybody’s quite comfortable with,” and arbitrage opportunities between national and state charters that banks don’t want to lose, she added….