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Shopping For the More Lenient Parent: The Office of Thrift Supervision

Have you ever, as a parent, had the (unpleasant) experience of telling your child not to do something, only to have the child retort: "But {you}. (your spouse) said I could.

That kind of "shopping for the lenient parent" psychology may be at work here, in banks' opposition to the Administration's proposed merger of the Comptroller of the Currency (NASDAQ:OCC)and the Office of Thrift Supervision (OTS). The official argument is that thrifts are a specialized function and need specialized supervision. The real reason is that the thrift office is the more lenient "parent.," whose officials are known to bend over to accomodate the "requests" of bankers.

Being suspicious of both Obama and the banks, we in this instance side with the banks for our own reasons. Yes, we would like to see more "adult" supervision, with the stricter regulators in place. But actually imosing it is likely to be a tricky process.For instance, what happens if a "reverse" merger takes place, and all the OTS officials "migrate" to the OCC. Then we'd have one insitution beholden to the banks, instead of one beholden, and one not.

In the long run, it seems safer to maintain two separate organizations (and try to fix the OTS). Then reform could come from one or the other, an either-or proposition. Would would have thought the FDIC would be a platform for reform? Or the New York State Attorney General's office? The more regulators, the more "mine fields" of malefactors.