Federal Reserve Bank of Kansas City President Esther George said the U.S. banking industry and economy have benefited from having both federal and state supervisors.
“I’ve seen no evidence that other regulatory structures, including single regulator models, fared better in the most recent crisis,” George said today to the Conference of State Bank Supervisors in Savannah, Georgia. Criticism that dual regulatory systems create incentives for lax examinations is “without merit,” she said. George didn’t comment on monetary policy or the outlook for the U.S. economy.
After the 2008 credit crisis, Congress preserved the separate state and federal supervisory systems, including oversight by the Fed regional banks, as part of a strengthening of regulation under the Dodd-Frank Act.
Fed Chairman Ben S. Bernanke in a Feb. 16 speech urged supervisors to “insist on high standards for lending, risk management and governance” to “protect banks from a possible race to the bottom and new problems down the road.”
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