The Obama Administration’s financial-industry reform package would create a National Bank Supervisor (NBS) to combine the functions of the Office of the Comptroller of the Currency, which regulates national banks, with those of the Office of Thrift Supervision, which governs federal savings associations. In doing so, the bill would also eliminate the federal savings association charter, forcing thrifts now holding it to choose between a bank charter or that of a state savings association. However, any parent of a savings association (new or old) would be treated as a bank holding company (BHC), forcing significant new activity, capital and other restrictions. Other provisions in the Obama plan would impose similar restrictions on state-bank parents, including those of industrial loan companies and similar charters now exempt from the FRB, essentially forcing a break between banking and commerce even for firms long engaged in these activities. While the measures provide a gradual transition period during which institutions could bring activities into conformity, parent-company regulation – including new capital requirements – could begin as soon as the mandatory charter change occurred. The measure would otherwise leave the dual-banking system more or less as is, but federal regulators would get new authority to preempt state corporate-governance rules they fear pose prudential problems.
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