This is the Cato Daily Podcast for Monday, November 16, 2009.

I'm Caleb Brown.

Connecticut Senator Chris Dodd wants to shake up the regulation of financial institutions

and services.

Among many other things, Dodd wants to close gaps in authority by consolidating bank regulation into one agency.

Banks have been able to choose from a few regulators.

Mark Calabria, Director of Financial Regulation Studies,

at the Cato Institute, comments.

There's a number of problems he's looking at,

one of which is a belief that competition between regulators has led sort of to a race to the bottom

where each regulator, bank regulator, would lower their standards of supervision and regulation

in order to attract more banks to their charter and

therefore enlarge their budget and enlarge their own power.

So if you believe that regulators want more power, more budget and get that by having

more entities they regulate, then this does lead to this race at the bottom and he is envisioning

by consolidating regulators into one regulator he would eliminate what he sees perverse competition.

Also seems like he's trying to solve some sort of information problem.

He says that a single regulator will do it more efficiently, that there will not be gaps in authority,

and that maybe the single regulator will just be able to aggregate information better.

Well, I mean, clearly there have been debates for decades, if not centuries, and sort of, you know, what's

the best way to get information?

I think this is one of actual the core flaws of his approach. You know you don't have to go back

...