Newspaper article THE JOURNAL RECORD

Gramm Makes Banking Reform a Top Priority

Newspaper article THE JOURNAL RECORD

Gramm Makes Banking Reform a Top Priority

Article excerpt

WASHINGTON -- A few months after blocking legislation to break down regulatory barriers between financial industries, Sen. Phil Gramm, R-Texas, said Tuesday such a bill is now his highest priority as the new Senate Banking Committee chairman.

But Gramm insisted something must be done about banks being forced to make "kickbacks and bribes" to activist groups, a practice he says is the result of community lending laws.

With the defeat in November of Sen. Alfonse D'Amato, R-N.Y., the banking panel's former chairman, proponents of the sweeping legislation had feared Gramm's takeover could bring the demise of the measure. It would remove Depression-era walls between the banking, securities and insurance industries and let them get more deeply into each other's businesses. Gramm's opposition to the 1977 community lending laws led him to block the financial overhaul legislation in the Senate's waning days late last year. In his first public statements on banking issues since becoming chairman, Gramm appeared to soften his earlier insistence on a repeal of the lending laws, which require financial institutions to lend to the poor and minorities in their neighborhoods. At the same time, though, Gramm said lawmakers need to come up with a "temporary solution" to what he sees as a menacing problem: banks forced to make "cash payments, kickbacks and bribes" to community activists in return for them dropping their opposition to the banks' proposed mergers with other financial institutions. The practice "is little more than extortion," Gramm told a news conference. The best short-term solution, he suggested, would be to bar banks from making cash payments to low-income groups. But John Taylor, president and chief executive officer of the National Community Reinvestment Coalition, said such improper payments to activist groups are "as rare as a hound's tooth." Laying out his legislative priorities, Gramm said he was determined to act swiftly on the financial overhaul bill, aiming for its approval by the Banking Committee by the end of February. …

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