Academic journal article Journal of Accountancy

House Banking Overhaul Legislation Is Abandoned

Academic journal article Journal of Accountancy

House Banking Overhaul Legislation Is Abandoned

Article excerpt

House Banking Committee Chair--James A.S. Leach (R-Iowa) announced that Congress would not repeal this year the Glass-Steagall Act of 1933. Leach was unable to garner the Banking Committee's support for the comprehensive bank industry modernization legislation, the Financial Services Competitiveness and Regulatory Relief Act of 1995 (HR 2520). Instead, the senator plans to move forward with legislation that will combine certain provisions of HR 1062, an earlier Glass-Steagall reform proposal, and HR 1858, which would reduce paperwork and other regulatory burdens for banks.

The Glass-Steagall Act was enacted during the Great Depression to protect banks and safeguard the financial system by separating commercial banking from investment banking, an arrangement Leach has long contested as "irrational." Leach put legislation to modernize the banking and securities industry at the top of the 1995-1996 House Banking Committee's agenda.

In a letter to Alan Greenspan, chairman of the board of governors of the Federal Reserve System, Leach said that even though Congress could not implement changes this year, modern markets would "continue to evolve, creating new products and blurring the distinctions between investment and commercial banking. …

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