Systemic regulator seen as inevitable

A systemic regulator for the country’s economy and financial system is likely to be put in place by the Obama administration, a senior lobbyist for the American Bankers Association told the organization’s annual Wealth Management and Trust Conference on Thursday in San Francisco. “Everyone agrees that there needs to be a systemic regulator, someone who can look at the landscape and consider the impact [of rules and regulations] on the overall financial environment,” said Floyd Stoner, executive vice president, congressional relations and public policy, for the ABA of Washington. Many of the problems that led to the financial crisis can be traced to “gaps in the regulatory process,” he said. “We need to figure out a way so that those gaps can’t be exploited.” Exactly who the regulator should be remains undecided, Mr. Stoner said. A number of proposals have called for the Federal Reserve Board to become a systemic risk regulator for the financial services industry, he said. Nonetheless, the structure of the regulatory body “is still up for debate,” Mr. Stoner said. He also told the ABA conference attendees that he does not expect the Obama administration to nationalize troubled banks. “That is not where they think this is going,” he said. “Nationalization is clearly not the right answer.”