(Bloomberg) — Five years after giving his name to a rule designed to restrict trading by Wall Street banks, Paul Volcker is pushing for another change that would put at least one top regulator out of business.
The Federal Reserve would be at the helm of a reorganized regulatory system eliminating the Office of the Comptroller of the Currency and combining other agencies in a plan released Monday by the Volcker Alliance, a group formed in 2013 by the former central bank chairman.
In a report outlining the plan, the group described its aim as a simpler, clearer and more adaptive regime. The plan calls for a new Prudential Supervisory Authority to handle supervision currently done by the Fed, OCC, Federal Deposit Insurance Corp. and market regulators.
Support from Volcker, who ran the Fed from 1979 to 1987, was crucial in winning enactment of the Dodd-Frank Act trading restrictions that bear his name. The goal of the changes now being sought by his group of former lawmakers and regulators is to address the unfinished work from Washington’s response to the 2008 credit crisis.
The proposal — likened by Volcker to the U.K. system — would put the new agency under direction of the Fed’s vice chairman for supervision.
Concerned about a regulatory and supervisory framework that he’s called “rickety,” Volcker told reporters Monday that the system “just doesn’t make sense” in today’s world. Lawmakers missed an opportunity in Dodd-Frank, he said, and now they should make amends.
In arguing for changes to a system in which oversight is both inconsistent and overlapping, he made a pitch for his former agency as the ideal place to house the new regime, telling reporters that the Fed is the best-equipped and the most independent financial agency of the U.S. government.
In separate news, The Federal Housing Finance Agency announced rules Friday that eased capital requirements on some loans from 2005 through 2008 when compared with measures proposed by the regulator in July.
Mortgage insurers were hobbled by guarantees issued in those years, because housing prices collapsed soon after. The final rules grant relief on loans from that period in cases where borrowers steadily met their commitments.
Mortgage insurers cover losses when homeowners default. Fannie Mae and Freddie Mac, the government-owned mortgage- investment companies overseen by the FHFA, require insurance when homeowners make down payments below 20 percent.