Beefing up state regulation

Northwestern Financial Review, Jun 1-Jun 14, 2003 by Dullum, Justin

The CSBS monitors the balance between federal and state power. "One-size-fits-all" rules handed down to the states from Washington are not always a good fit for state institutions, said Neil Milner, CSBS president/ CEO. Further, he noted that laws are easier to pass than repeal.

Arguments for more federal rules often involve the idea that simple is better, but simple isn't necessarily better when it comes to bank supervision, said Cox. He sees federal bank rules that allow states some wiggle room - such as those found in the regulatory relief act - may do nothing to reduce complexity but are still good for the health of the overall banking industry.

"There's a renewed debate in Washington over simplification and consolidation of supervision," said Cox. "Bankers, particularly community bankers, have always been very suspicious of consolidation, and I think wisely so. Consolidated power in Washington results in one-size-fits-all. Community bankers still want local decision-making so they can be more flexible. That sometimes leads to more complicated arrangements, but it's more important that flexibility is maintained."