Magazine article American Banker

Leach Blasts OCC on Direct Securities Underwriting by Banks

Magazine article American Banker

Leach Blasts OCC on Direct Securities Underwriting by Banks

Article excerpt

House Banking Committee Chairman Jim Leach blasted a regulatory proposal designed to let national bank subsidiaries underwrite securities directly.

"There is not a shred of statutory support for the notion that a national bank is authorized to conduct activities in a subsidiary that are not permissible for the bank itself," the Iowa Republican told Comptroller of the Currency Eugene A. Ludwig in a letter last week.

Rep. Leach has introduced legislation to repeal the Glass- Steagall Act that would allow banks to affiliate with securities firms, but only through a holding company.

The Comptroller's office proposed regulations last November that would allow bank subsidiaries to offer products and services prohibited for the parent. The agency refused to comment on Rep. Leach's April 5 letter; a spokeswoman said the comptroller is still working on his response.

But Rep. Leach is not the first lawmaker to criticize the comptroller's proposal.

John D. Dingell, D-Mich., then chairman of the House Commerce Committee, argued in December that the plan "raises significant questions of fact and law with troubling practical and public policy implications."

The Comptroller's office shot back in January as Mr. Ludwig defended the agency's authority to permit banks to offer new products and services through subsidiaries.

"There is no reason a national bank should be denied such corporate flexibility," Mr. Ludwig said. New activities, the comptroller noted, would be approved only if safe and sound. …

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