Reworked Bank Regulation Fees Would Level The Playing Field

August 14, 2009|By David Cho | David Cho,The Washington Post

The Obama administration is planning a broad reworking of the fees financial firms pay for their federal regulation, increasing the rates for big companies while easing the burden for smaller ones, officials said.

The new two-tiered, pay-for-regulation approach is intended to partly cover the costs of more vigorous bank regulation and to create a new consumer financial protection agency. It reflects the administration's view that large companies are more complex and expensive to regulate, the officials said.

But the approach is angering big Wall Street firms and their advocates who have been campaigning vigorously on Capitol Hill to block the creation of the consumer protection body. Industry officials warned that the higher fees imposed by the federal government will likely be passed on to the consumer.

Under the administration's plan, any bank with more than $10 billion in assets would face a hike in fees from its existing regulator as well as from the new consumer protection agency.

Financial firms under $10 billion in assets may see lower fees. Currently, banks that answer to state officials pay less than banks that are supervised by federal regulators. The playing field would be leveled by bringing the fees paid by the nationally regulated banks down to the state level.

Meanwhile, unregulated consumer financial firms, such as mortgage lenders, would have to pay for regulation for the first time under the administration's plan.

The financing plan fills a critical gap in the administration's proposal to overhaul the regulation of the financial system. The overall plan needs congressional approval.

Industry officials from big firms called the uneven assessment of fees unfair.

Community bank organizations cheered the proposal.

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