US Senator Dodd's super bank cop faces tough battle

* Dodd bill abolishes OCC, OTS; strips Fed, FDIC of roles

* Single bank cop has foes among banks, gov't, Congress

* Proposal goes further than Obama, House approach

By Karey Wutkowski

WASHINGTON, Nov 10 (Reuters) - A U.S. Senate proposal to
create a federal super cop to police banks faces formidable
opposition from the industry, current regulators and a senior
House lawmaker who recently blasted the idea.

Christopher Dodd, chairman of the Senate Banking Committee,
unveiled on Tuesday his highly anticipated version of financial
regulatory reform, which calls for consolidating all federal
policing of banks in a new body called the Financial
Institutions Regulatory Administration, or FIRA.

There has been little defense of the current system, which
scatters responsibility among four banking regulators.

But a single federal regulator scares small banks who fear
their interests will be secondary to those of financial giants,
and irks current regulators who do not want to lose power.

Also, Representative Barney Frank, Dodd's reform architect
counterpart in the House of Representatives, said late last
month there was "no remote chance" of that much consolidation.
The Obama administration also does not go as far as Dodd's
proposal.

Dodd promoted the idea enthusiastically during a news
conference on Tuesday, flanked by several Democratic senators.
No Republican senators have yet publicly endorsed his bill.

"For firms that play by the rules, this single prudential
regulator will provide clarity, cut red tape and make it easier
to compete," the Connecticut Democrat said. "But those
institutions that would undermine the security of our economy
will no longer be able to shop for the weakest regulator."

Currently, banks can choose between the Federal Reserve,
the Federal Deposit Insurance Corp (FDIC), the Office of the
Comptroller of the Currency (OCC) and the Office of Thrift
Supervision (OTS) as their primary regulator.

Lawmakers have said some institutions, such as mortgage
lender Countrywide and giant insurer American International
Group Inc (AIG.N), exploited the system and chose the most
friendly regulator.

The administration and Frank want to merge the OCC and OTS,
while allowing the Fed and FDIC to retain their supervisory
powers.

Dodd's plan would preserve state bank regulators, but would
abolish the OCC and OTS and transfer their powers, along with
the supervisory roles of the Fed and FDIC, to the new Financial
Institutions Regulatory Administration.

FDIC Chairman Sheila Bair said on Tuesday that there are
ways to streamline banking regulation without going fully to a
single regulator. The latter approach, she said, may not
accomplish much.

"In the abstract some may think it is a good idea," Bair
said to reporters during a bankers conference in New York. "I
think there is some risk because you are putting all your eggs
in one basket, but in terms of attacking the root causes of
this crisis, it's difficult for us to see how these things are
related."

Bankers criticized Dodd's single regulator proposal on
Tuesday.

The Independent Community Bankers of America said the
diversity in the size of banks should be reflected through a
diversity of regulators. Dodd's bill would create a division of
community bank supervision within the Financial Institutions
Regulatory Administration, but the industry group said it still
"adamantly opposes" a single federal banking regulator.

The American Bankers Association, which represents banks of
all sizes, said the single regulator idea failed "miserably" in
Great Britain and would inevitably undermine the state-
chartered banking system.

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(Reporting by Karey Wutkowski with additional reporting by
Clare Baldwin in New York; editing by Andre Grenon)