Financial Firms Try to Tweak Reform Law to Gain Powers
Anason, Dean, American Banker
The ink is hardly dry on the Gramm-Leach-Bliley Act, but financial services companies are already trying to stretch its outer limits.
The law contains a six-page list of activities that are "financial in nature," including lending, insurance underwriting, securities underwriting and dealing, and financial advice services. It gives the Federal Reserve Board and the Treasury Department joint authority to define which new activities are acceptable for financial holding companies or banks' direct financial subsidiaries.
With three weeks left until these provisions take effect, Gary Gensler, Treasury under secretary for domestic finance, said regulators have received requests for new powers. In an interview, he vowed to work closely with Fed officials to make rules on how to grant expanded powers.
The Financial Services Roundtable made the first request, urging regulators to add five more powers to the list: nonfinancial data processing, real estate brokerage, management consulting on nonfinancial matters, broad-based travel services, and brokerage activities known as "finder" services.
The group argues that because these services are not controversial and are so closely related to ones banking organizations already provide, regulators should include them when they implement regulations rather than wait for applications from the industry. If anything, observers said, it shows that the industry is evolving faster than new laws and regulations can be written.
"We wanted to jump-start the process to try to get more stuff included up front," said Richard M. Whiting, the roundtable's executive director and general counsel, who included the wish list in a Feb. 8 letter to Treasury Secretary Lawrence H. Summers and Fed Chairman Alan Greenspan. "These (services) are all very, very reasonable. They haven't been allowed in the past, for more political and historical reasons that now have been bypassed by the marketplace and changes in the laws."
The American Bankers Association plans to compile a similar list of brokerage and other powers to share with regulators, said the ABA's regulatory affairs director, James D. McLaughlin. The ABA, he said, is focusing on powers sought by small banks and is using its National Conference of Community Bankers in Palm Desert, Calif., this week to fish for suggestions.
"The obvious one is real estate brokerage, because banks are intimately involved in the real estate financing and settlement process," Mr. McLaughlin said, adding that many small towns do not have real estate brokers. "That would be a really good service for communities and a good product for banks."
Treasury officials said in an interview last week that Gramm-Leach-Bliley does not require them to issue a rule on defining new powers but that they and Fed officials …
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Publication information: Article title: Financial Firms Try to Tweak Reform Law to Gain Powers. Contributors: Anason, Dean - Author. Magazine title: American Banker. Volume: 165. Issue: 36 Publication date: February 23, 2000. Page number: 1. © 2009 SourceMedia, Inc. COPYRIGHT 2000 Gale Group.
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