Senate Banking Chairman Christopher Dodd's idea for creation of a single national bank regulator with broad powers continues to run into opposition, even though he has yet to publicly define how such an agency would operate.

House Financial Services Chairman Barney Frank on Wednesday spoke out against the proposal to consolidate federal banking regulators beyond what the Obama administration has proposed by merging the Office of the Comptroller of the Currency with the Office of Thrift Supervision.

The Financial Services Roundtable and the Financial Services Forum, both representing big banks, support such a concept of greater consolidation by also merging the bank supervision duties of the Federal Reserve -- which has jurisdiction over large bank holding companies and state-chartered banks -- and the FDIC, which has oversight over most state-chartered banks.

Frank echoed a complaint community banks have voiced against taking away additional bank supervision duties by noting that the FDIC plays a crucial role in oversight for state-chartered banks and that any change could erode the dual-banking system.

"The point of difference is the dual-banking system. The FDIC is the state bank regulator," Frank said after a hearing on revamping the financial regulatory system.

A senior administration official also said that such a merger "wasn't an essential element of reform." The official, speaking on background, said it would be a mistake for the Fed to lack supervisory oversight over parts of the financial system.

"I think if you look internationally, the countries that had a consolidated authority separate from their monetary authority did not fare especially well," the official said. "Britain would be a prime example if you go talk to the Bank of England." During Wednesday's hearing, Joseph Smith, North Carolina's commissioner of banks, testified that such a merger would effectively kill the state system.

"A single federal regulator would be the beginning of the end of the state system; as consolidation accelerates, smaller institutions will be further disadvantaged, and the largest and most politically influential institutions will reinforce the primacy of the federal system. Consumers and the industry will be best served by more coordination and cooperation between regulators, not by the elimination of regulators through consolidation," Smith said in his prepared remarks.

Dodd and Sen. Charles Schumer, D-N.Y., are working on a plan for further consolidation as part of the Senate's bill. Frank said the House will stick with the Obama plan but retain a national thrift charter that the Treasury Department has proposed eliminating.

On another matter, during an afternoon hearing Frank expressed frustration at federal regulators for not doing enough to protect consumers from abusive home mortgages and credit cards, citing it as evidence of further need to strip such duties from them and give them to a new Consumer Financial Protection Agency.

"You say that you do not have strong enough rules; I do not recall either of you coming to me and saying..., 'Here is a defect in consumer protection,' as you often did in your general area," Frank told Comptroller of the Currency John Dugan and FDIC Chairwoman Sheila Bair.

Bair and Dugan both disputed that charge. "Mr. Chairman, I will get my testimony out. We have absolutely testified ..." Bair said, before being cut off.

Dugan later said the OCC has taken actions against national banks under his supervision, such as stopping payday lenders from obtaining a national bank charters and cracking down on the subprime credit card market.

Frank, however, argued that Dugan supported having the Federal Reserve continue its role as consumer watchdog even though it has a poor record on the matter and had to be prodded by Congress to take recent action on mortgages, credit cards and overdraft protection.

"The consequence of what you are saying -- don't give any enforcement powers to this [new agency]. Federal Reserve refused to use its enforcement powers and you are for the status quo with the Federal Reserve," Frank charged.

Dugan disagreed and said the CFPA should be given rule-writing power and examination and enforcement power over non-banks.