Banks Urge ?No? Vote
January 23, 2002
Financial Industry Associations Say Congress Meant To Empower Regulators
Inman News Features
An alliance of powerful financial services organizations has sent a letter to every member of Congress opposing legislation that would bar banking institutions from entering the real estate brokerage business under a proposal put forward by the Federal Reserve and U.S. Treasury under the Gramm-Leach-Bliley Act.
The letters were sent by the Financial Services Coordinating Council, which lists the American Bankers Association, American Council of Life Insurers, American Insurance Association and Securities Industry Association as its members.
The legislation at issue consists of two companion measures, H.R. 3424 in the U.S. House of Representatives and S. 1839 in the U.S. Senate, both of which are supported by the National Association of Realtors.
The letters state: "The fundamental purpose of the Gramm-Leach-Bliley Act was to develop a flexible structure for our financial system that could adjust to changes in technology and other aspects of the marketplace. Congress believed, and we agree, that such a flexible structure would increase the soundness of our financial system, promote economic growth, decrease costs, and provide consumers and businesses with more choices. Congress recognized that the legislative process is too slow to keep pace with changes in technology and the global marketplace, as demonstrated by the long history of Congressional gridlock prior to Gramm-Leach-Bliley.
"Congress expressly gave the Federal Reserve Board and Treasury the authority to authorize financial holding companies to engage in new activities in addition to the products and services enumerated in the statute. In delegating this authority, Congress sought to empower experienced and independent financial regulators to make such determinations, based upon elaborate statutory criteria, that match marketplace realities. This is what financial modernization legislation is about: the ability to evolve. (This legislation) seeks to return to the pre-Gramm-Leach-Bliley Act environment where industry competitors ask Congress to choose winners and losers.
"The financial services industry, the regulatory agencies, and Treasury are in the very beginnings of interpreting Gramm-Leach-Bliley. Reopening one of its most central provisions would raise a great deal of uncertainty within the industry. We therefore strongly oppose (this legislation)."
Copyright: Inman News Service