Beyond Bank Reform: The Broader Agenda

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Beyond Bank Reform: The Broader Agenda

As Congress and the administration debate long-overdue legislation and regulations to align U.S. and international bank practice more closely, other policy issues remain outstanding that equally affect the global position of American financial companies.

These include the fate of the Riegle-Garn Fair Trade in Financial Services Act, the status of overseas-initiated bank takeovers under a reconstituted Committee on Foreign Investment in the United States, and the prospects for a Foreign Sales Corporation type of mechanism to promote the export of U.S. banking and securities capabilities.

The Fair Trade in Financial Services bill, reintroduced this session by Donald W. Riegle (D-Mich.), chairman of the Senate Banking Committee, and Jake Garn (R-Utah), passed the upper chamber earlier this year as part of the Defense Production Act and now awaits consideration in the House.

Equality Sought

The legislation would require reports, negotiations, and discretionary sanctions to ensure equality of competitive opportunity abroad between American and local banking and securities concerns. Retaliation could be approved against units here whose countries deny effective national treatment as determined by the Treasury Department and other agencies.

The Treasury's latest national treatment survey issued last December and the submission of its bank reform package to Congress in March generated strong momentum in favor of the Riegle-Garn reciprocity measure.

Foreign Takeovers

By tying Riegle-Garn to the Defense Production Act, which renews the authority of the Committee on Foreign Investments, supporters also signaled their intent to subject international bank takeovers to potential review by the Treasury-led panel, which to date has only monitored sensitive industrial acquisitions. In the House, both the chief sponsor of Riegle-Garn, Rep. Fortney (Pete) Stark (D-Calif.) and Banking Committee chairman Henry Gonzalez (D-Tex.) have focused attention on the strategic challenge to U. …