Financial Regulation: Modernization of the Financial Services Regulatory
System (Testimony, 03/15/95, GAO/T-GGD-95-121).

Proposals before Congress to modernize the financial services regulatory
system provide a range of options for restructuring the traditional
relationships between banking, securities, and related activities.
Enhancing financial sector efficiency is an important policy goal, but
other important goals must also be considered, such as maintaining the
safety and soundness of the financial system and the deposit insurance
funds, preventing undue concentrations of economic power, and protecting
consumers from potential conflicts of interest.  GAO believes that
modernization of the financial services regulatory system should (1)
provide consolidated and comprehensive supervision of all companies
owning federally insured depository institutions--with coordinated
functional regulation of individual components, (2) ensure that capital
levels adequately reflect the amount of risk-taking, and (3) ensure that
regulatory resources and capabilities keep pace with expanding bank
powers and increased links between banking and other activities.  Moving
away from a financial services holding company approach or allowing
commercial or industrial firms to own banks raises questions and
concerns that suggest that Congress should proceed with caution.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-GGD-95-121
     TITLE:  Financial Regulation: Modernization of the Financial 
             Services Regulatory System
      DATE:  03/15/95
   SUBJECT:  Financial management
             Financial institutions
             Insured commercial banks
             Financial analysis
             Holding companies
             Banking regulation
             Risk management
             Interagency relations
             Capital

             
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