Magazine article American Banker

Bankers Back Fed, Urge It to Go Further in Letting Employees Work for Funds

Magazine article American Banker

Bankers Back Fed, Urge It to Go Further in Letting Employees Work for Funds

Article excerpt

Bankers have endorsed the Federal Reserve Board's first crack at Glass- Steagall reform, but urged the agency to go even further by letting bank employees work for securities companies.

In comment letters filed last month, bankers wrote that there is no reason for the Fed to continue applying an employment restriction from section 32 of the Depression-era law.

This restriction forbids employees of banks and holding companies from working for a mutual fund. The Fed proposed June 26 that holding company officials be exempted from the ban.

"The application of the prohibitions in section 32 to bank holding companies is not required by Congress, is not warranted, and is incFedsonsistent with board actions in recent years," wrote Bruce Moland, vice president and assistant general counsel at Norwest Corp.

Several industry officials, however, said the Fed should eliminate the ban for bank employees as well. That action might require congressional approval.

Dennis Gibbons, senior vice president of Wells Fargo & Co., wrote:"

"Removing the prohibition on interlocks between member banks and mutual funds would benefit the mutual funds and the shareholders by making available to the funds a pool of potential officers and directors who are extremely knowledgeable about the affairs of the funds and committed to the success of the funds. …

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