Magazine article American Banker

La. Lawmaker Offers New Route to Merger of Commerce, Banking

Magazine article American Banker

La. Lawmaker Offers New Route to Merger of Commerce, Banking

Article excerpt

Rep. Richard Baker plans to offer legislation that directly challenges House Banking Committee Chairman Jim Leach's staunch opposition to mingling banking and commerce.

The Louisiana Republican's amendment to the chairman's Glass- Steagall bill would allow a firm to become a bank holding company if 60% of its business is derived from financial services. That means up to 40% of the company's business could come from other areas - auto manufacturing, for example, or computer software. Rep. Baker's amendment represents an end run around obstacles to a stand-alone measure he had proposed but that has attracted scant support.

"The amendment does violence to one area that Chairman Leach has defined as an area of principle for him - maintaining the separation between banking and commerce," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America.

The Iowa Republican has said that allowing banking and commerce to mix could lead to massive conglomerations of economic power. The Baker amendment also aims to broaden the definition of "financial services" in Rep. Leach's bill by adding insurance companies, among other things, to the list of firms that may affiliate with insured banks under a holding company.

Under the Leach bill, which is set to be marked up starting May 9, bank holding companies would be able to set up only securities affiliates.

Rep. Leach has argued that the Glass-Steagall bill would be doomed to failure if the committee broadened it to include insurance provisions. …

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