Be careful what you wish for. That’s my modest advice to some bankers and their government regulators who want to ease up on bank oversight.
An article in the Wall Street Journal last week reported that several banks around the country are dropping the Federal Reserve as a regulator. The actions so far seem innocent enough, and perfectly reasonable in the examples mentioned, but they did conjure up some bad memories of how the housing bust – and subsequent global financial crisis – got started.
Here’s the story.
According to the Journal, Little Rock-based Bank of the Ozarks in June opted to ditch its holding-company structure, which means it is no longer regulated by the Fed. Now, as a bank only, and not a BHC, it will be regulated solely by the Federal Deposit Insurance Corp.
Saving money from having two layers of regulation was the main motivator for the bank. George Gleason, the bank’s CEO, said, “We didn’t really need to be regulated by both.”
The bank, which has about $21 billion in assets, is the largest bank to make such a move, but it’s not the only one. Continue reading "Let's Not Relive The Past The Hard Way"