Congress could consider overhaul of financial regulatory agencies
One option: Combine all financial regulators into a single entity.
Congress may want to consider overhauling the regulatory structure for the financial services industry, the Government Accountability Office said in a new report.
Since the current regulatory system relies on having "clear-cut boundaries" between the banking, securities, insurance and futures sectors, "industry changes that have caused those boundaries to blur have placed strains on the regulatory framework," GAO said in the report (GAO-05-61), which was requested by Senate Banking Committee Chairman Richard Shelby, R-Ala.
GAO said Congress might want to consider modifying the regulatory structure to better address the risks associated with "large, complex, internationally active firms," promote domestic and international competition, and contain systemic risk.
One option, GAO said, is to consolidate the regulatory structure within the banking, securities, insurance and futures sectors, so that there would be a primary federal point of contact for each of those functional areas.
GAO said another option is to combine all financial regulators into a single entity. But the report cautioned that such an organization "could be unwieldy and costly" given the size of the economy and the large number of U.S. financial institutions.
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