Newspaper article THE JOURNAL RECORD

Panel Begins Review of Banking Overhaul

Newspaper article THE JOURNAL RECORD

Panel Begins Review of Banking Overhaul

Article excerpt

WASHINGTON (AP) _ The U.S. House of Representatives Banking Committee on Wednesday began a two-week marathon to review and amend the Bush administration's plan to overhaul the nation's banking system. "The decisions we will make in the next few days will have a profound effect on the future of this nation's financial system," said Rep. Henry B. Gonzalez, D-Texas, chairman of the committee. The proposal is considered the most sweeping financial law changes since the New Deal reforms of the 1930s. It would replenish the dwindling Federal Deposit Insurance Corp., permit banks to affiliate with securities firms and insurance companies, allow commercial companies to own banks, let banks open branches nationwide and reorganize the federal regulatory bureaucracy. "The world has changed, but the banking system has been unable to respond to that change," Gonzalez said. "We see the result in a thousand bank failures in the past decade, with no end in sight." The 36-member subcommittee on financial institutions unanimously endorsed key elements of the Bush plan last month. The full 52- member committee has scheduled five all-day sessions with the hope of acting on the bill before the Fourth of July recess. However, the opening hours of the first session passed with opening statements by committee members and lengthy debate of peripheral issues. The bill, as originally drafted, increased the FDIC's line of credit at the Treasury to $30 billion from $5 billion. Without the increase, the agency is in danger of running out of money to pay off depositors at failed banks. Banks are to repay the borrowing through higher insurance premiums to the FDIC. On a voice vote, the committee adopted an amendment by Rep. John W. Cox Jr., D-Ill., which would give the FDIC the option of borrowing the money by selling bonds to banks rather than through the Treasury. …
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