By virtue of legislative inaction, on June 30, 2012, Governor Brown's Reorganization Plan 2 (GRP 2) has been approved. As part of an overall effort to improve efficiency within state government, GRP 2 consolidates the State's oversight of financial businesses by merging the California Department of Financial Institutions (DFI) and the California Department of Corporations (DOC) into a larger Department of Business Oversight (DOBO). While the DFI and DOC would be preserved as divisions under the new Department, professionals within the banking community and advisors to the banking community have expressed a number of concerns about this reorganization, including the following:
*Consolidation could devalue the state banking charter, as reducing the DFI's status to a division would weaken its regulatory focus, impede service and innovation within the primary bank regulatory agency and result in California-chartered banks converting to national charters. In addition, reducing the position of the current Commissioner of Financial Institutions to a Deputy Commissioner could weaken the strength of the leader of California state banks in the eyes of other state and national bank regulators and could inhibit the quality of candidates for this new position.
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