WASHINGTON (UPI) - Senate Banking Committee chairman Jake Garn,
R-Utah, Wednesday pledged to pass a comprehensive banking reform bill
this year, but said there is ""no way'' it would contain authority
for interstate banking.
Garn, expressing his frustration over four years of congressional
hearings and still no banking reform law, said, ""I do intend to push
as hard as I possibly can for comprehensive banking legislation. The
time to act is not this year. It was last year.''
Garn said the bill would close the so-called "non-bank" bank
loophole, clarify interstate banking rules and allow depository
institution holding company subsidiaries to offer mutual funds and
underwrite and deal in municipal revenue bonds, mortgage-backed
securities and commercial paper.
Although the Senate approved legislation last year, the House did
not act, so the bill died at the end of the last Congress.
Federal Reserve Board Paul Volcker told the panel that legislation
is ""urgently needed'' to update the definition and authority of
depository institutions and to close loopholes that allow commercial
firms to offer limited banking services without being subject to many
""If it looks like a bank, if it acts like a bank, if it makes
noises like a bank, it ought to be subject to the same restrictions
of a bank,'' Volcker said.
Volcker also urged Congress to establish federal guidelines for
interstate banking since many parts of the country have already
slipped through the back door by authorizing ""discriminatory''
regional banking compacts and utilizing the modern technology of
automatic teller machines.
""I think the federal government has every right to step in and
set the ground rules,'' he said, noting that the federal government
is the principle insurer.
But Garn adamantly opposed the suggestion.
""There ain't no way we're going to put that provision in this
bill,'' he said. ""I can see that as a nice little time bomb in the
middle of my bill ready to blow it apart.''
Garn suggested that the only senators who would vote for
interstate banking would be those from the two states with major
financial centers - New York and California. Volcker disagreed with
the assumption that interstate banking would lead to the
consolidation of the nation's banking industry in the hands of a few
Sen. William Proxmire, D-Wis., the ranking Democrat on the banking
panel, said a comprehensive banking bill can be passed through the
committee before the summer recess if the committee sticks
essentially with the same bill it passed last year and does not
reopen all of the issues. …