One, which I will mention in a moment, has been addressed by the banking agencies working together. Others require congressional attention. Charter conversions and regulatory arbitrage The dual banking system and the existence of different federal supervisors create the opportunity for insured depository institutions to change charters or federal supervisors.
While institutions may engage in charter conversions for a variety of sound business reasons, conversions that are motivated by a hope of escaping current or prospective supervisory actions by the institution's existing supervisor undermine the efficacy of the prudential supervisory framework. Accordingly, the Federal Reserve welcomed and immediately supported an initiative led by the Federal Deposit Insurance Corporation (FDIC) to address such regulatory arbitrage.