As the Congressional Oversight Panel pushes for the authority of financial industry regulators to conduct bank capital stress tests at their discretion, the word of the day for financial industry regulators seems to be expansion instead of consolidation. The Obama administration for weeks has indicated a possible merging of various regulators as part of a financial industry regulation overhaul to streamline authorities and increase oversight. New reports, however, suggest a different approach to reforming financial industry regulation may be in the works. As early as Friday, reports began circling that discussion of a marriage between the Securities and Exchange Commission and the Commodity Future Trading Commission had been shelved. In the latest report confirming the discussion, sources told the Wall Street Journal the new tactic being tossed around the administration involves broader powers among existing agencies, rather than a merging of regulators into fewer super-agencies. The move would indicate a possible edging back from the sweeping financial regulatory overhaul discussed in recent weeks, hinting at a possible return of confidence in the financial system. In a separate show of confidence in US banks, the US Treasury Department today announced 10 major banks received clearance to repay up to $68bn in TARP funds. Only banks that could prove their ability to issue debt and raise sufficient capital outside of government aid received approval from their regulators to return government funds. Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.

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