U.S. Comptroller says merger study healthy

By John Poirier

WASHINGTON (Reuters) - A U.S. Treasury Department study on whether to fuse the Office of Comptroller of the Currency with a sister banking agency, the Office of Thrift Supervision, is "appropriate and healthy," U.S. Comptroller John Dugan told Reuters on Wednesday.

"I think anybody who looks at our system of four banking regulators, when they come on it anew, wonders whether this is the best way to approach things," Dugan said at the Reuters Real Estate Summit.

"I think it is perfectly appropriate and healthy to look at that," he said.

The U.S. banking industry is also regulated by the Federal Reserve and the Federal Deposit Insurance Corp.

The idea of folding together the OCC and the OTS has been discussed in government and industry circles for a number of years but has not gained any traction.

The Treasury Department said on Wednesday that it will launch a review of the U.S. financial services regulatory structure as part of its broad effort to ensure the competitiveness of U.S. capital markets. A blueprint for possible changes will be issued early in 2008, the final full year of the Bush administration.

"They are doing a study and are going to look at all options," said Dugan. "There are pros and cons of doing it different ways."

"From my vantage point, we believe that as cumbersome as it appears on paper, we work hard to make the system work and we do think it works in practice," he said.

"I'm sure they will solicit views from regulators as they go forward and as is appropriate."

A spokesman for the OTS said the agency supports the review of ways to improve the competitiveness of the U.S. financial services industry.

"Among the options on the table, that (agency merger study) deserves consideration," spokesman Kevin Petrasic said, noting that the OTS regulates providers of mortgages and insurance as well as thrifts. "It's always healthy to study the issue."

Both the OTS and the OCC are divisions within the Treasury Department.

The OTS supervises the safety and soundness of more than 800 savings and loan institutions, which had $1.49 trillion in combined assets at the end of the first quarter.

The OCC regulates some 1,900 nationally-chartered banks -- such as Wachovia, Citibank, Bank of America and Wells Fargo -- with more than $7 trillion in combined assets.

On Tuesday, Securities and Exchange Commission Chairman Christopher Cox said he supported a broad examination comparing the U.S. financial markets regulatory structure to Britain, where all financial products are regulated by a single agency.  Continued...