Prior Proposals to Consolidate Federal Financial Regulators ______________________________________ ELIZABETH F. BROWN This paper was prepared for the Volcker Alliance as background for its project on structural reform of the federal financial regulatory system. The views expressed in this paper are those of the author and do not necessarily reflect the position of the Volcker Alliance. Any errors or omissions are the responsibility of the author. ______________________________________ Ms. Elizabeth F. Brown, J.D., is an assistant professor in the Department of Risk Management and Insurance, J. Mack Robinson College of Business, Georgia State University. Contact Author: Elizabeth F. Brown, Department of Risk Management and Insurance, Georgia State University, P.O. Box 4036, Atlanta, GA 30302-4036; tel: 404-413-7501; cell: 404-247-8713; email: [email protected]. Table of Contents Executive Summary ........................................................................................................................ 8 I. Proposals Between 1915 and 1921 ............................................................................................ 14 A. The Proposals ....................................................................................................................... 14 1. Structural Reorganization ............................................................................................... 16 2. Proposed Implementation ............................................................................................... 17 B. Arguments for and Against the Proposals ............................................................................ 18 C. What Happened to the Proposals? ........................................................................................ 18 II. Brownlow Committee Report, 1937 ........................................................................................ 19 A. The Proposal ......................................................................................................................... 19 1. Structural Reorganization ............................................................................................... 20 2. Proposed Implementation ............................................................................................... 24 B. Arguments for and Against the Proposal .............................................................................. 25 C. What Happened to the Proposal? .......................................................................................... 26 III. Brookings Study, 1937 ............................................................................................................ 28 A. The Proposed Consolidation ................................................................................................ 28 1. Structural Reorganization .................................................................................................. 28 2. Proposed Implementation .................................................................................................. 29 B. Arguments for and Against the Proposal .............................................................................. 30 C. What Happened to the Proposal? .......................................................................................... 32 IV. Hoover Commission Proposals 1949 ...................................................................................... 32 A. The Proposal ......................................................................................................................... 32 1. Structural Reorganization ............................................................................................... 33 2. Proposed Implementation ............................................................................................... 36 B. Arguments for and Against the Proposal .............................................................................. 37 C. What Happened to the Proposal? .......................................................................................... 39 V. Commission on Money and Credit, 1961 ................................................................................ 40 A. The Proposal ......................................................................................................................... 40 1. Structural Reorganization ............................................................................................... 40 2. Proposed Implementation ............................................................................................... 41 B. Arguments for and Against the Proposal .............................................................................. 41 2 C. What Happened to the Proposal? .......................................................................................... 43 VI. Office of the Comptroller of Currency’s Advisory Committee on Banking, 1962 ................ 44 A. The Proposal ......................................................................................................................... 44 1. Structural Reorganization ............................................................................................... 45 2. Proposed Implementation ............................................................................................... 46 B. Arguments For and Against the Proposal ............................................................................. 46 C. What Happened to the Proposal? .......................................................................................... 47 VII. The Patman Bill and the Multer Bill, 1965 ........................................................................... 48 A. The Proposal ......................................................................................................................... 48 1. Structural Reorganization ............................................................................................... 48 2. Proposed Implementation ............................................................................................... 50 B. Arguments For and Against the Proposal ............................................................................. 52 C. What Happened to the Proposal? .......................................................................................... 54 VIII. Hunt Commission, 1971 ...................................................................................................... 55 A. The Proposal ......................................................................................................................... 55 1. Structural Reorganization ............................................................................................... 55 2. Proposed Implementation: .............................................................................................. 56 B. Arguments For and Against the Proposal ............................................................................. 56 C. What Happened to the Proposal? .......................................................................................... 58 IX. Compendium of Major Issues in Banking Regulation, 1975 ................................................. 58 A. The Proposal ......................................................................................................................... 58 1. Structural Reorganization ............................................................................................... 58 2. Proposed Implementation ............................................................................................... 61 B. Arguments For and Against the Proposal ............................................................................. 62 C. What Happened to the Proposals? ........................................................................................ 62 X. Wille Proposal, 1975 ................................................................................................................ 63 A. The Proposal ......................................................................................................................... 63 1. Structural Reorganization ............................................................................................... 63 2. Proposed Implementation ............................................................................................... 65 B. Arguments For and Against the Proposal ............................................................................. 65 C. What Happened to the Proposal? .......................................................................................... 67 XI. Financial Institutions and the Nation’s Economy (FINE) Study, 1975 .................................. 67 3 A. The Proposal ......................................................................................................................... 68 1. Structural Reorganization ............................................................................................... 68 2. Proposed Implementation ............................................................................................... 69 B. Arguments For and Against the Proposal ............................................................................. 69 C. What Happened to the Proposal? .......................................................................................... 70 XII. Senate Governmental Affairs Committee Proposal, 1977 ...................................................