Newspaper article St Louis Post-Dispatch (MO)

Fed Would Ease Bank Securities Rules

Newspaper article St Louis Post-Dispatch (MO)

Fed Would Ease Bank Securities Rules

Article excerpt

The Federal Reserve made a surprising end-run around Congress Wednesday by proposing to ease Depression-era restrictions so U.S. banks can better compete head-on with Wall Street.

Banks would be permitted to generate 25 percent of their revenue from underwriting and dealing securities, up from the present limit of 10 percent, according to the Fed proposal. That mirrors the percentage requested last month by the banking industry after comprehensive bank overhaul legislation stalled in Congress.

In a second proposal, the Fed also would let banks and thrifts buy and sell the securities underwritten by their investment subsidiaries, further breaching the firewalls that have separated the two sides of the companies since the Glass-Steagall Act was passed by Congress in 1933.

"The Fed wants to dismantle Glass-Steagall by fiat rather than legislatively," said Jack Nusbaum, a partner at the New York law firm Willkie Farr & Gallagher in New York.

The Fed set a Sept. …

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