Securities industry may bid for new banking rules
Wall Street brokers and investment bankers frequently devise complicated strategies. This week they will have another opportunity when the Securities Industry Association (SIA) meets in Boca Raton, Fla., to map out a plan to get Congress to pass new banking legislation, which the industry can live with.Skip to next paragraph
Subscribe Today to the Monitor
Robert E. Linton, the association's new chairman, says this meeting is one of the most important the industry organization has held in years. The commercial banks, thrifts, and insurance companies are all encroaching on the brokerage-investment banking industry. And, as Mr. Linton said to some reporters recently, he expects this trend to continue.
Thus, the Securities Industry Association as well as the American Bankers Association will both be pressing for legislation - probably from opposite directions. The bankers will be asking for new powers for the banks, while the SIA will be asking for new regulation of any of those new powers. Despite this split, Mr. Linton says the possibility of changes in the Glass-Steagall Act is good. The Act largely regulates the banking industry.
''I think the chances of a banking bill getting passed are excellent, since 1983 is the most nonpolitical year you are going to have,'' he adds. Sen. Jake Garn (R) of Utah has said that Congress will pass new legislation. Rep. Fernand St Germain (D) of Rhode Island has also indicated he will push for it. Mr. Linton says high-level members of the Reagan administration have told him they, too, are in favor of Congress's tackling banking legislation.
Last year, Congress started to make changes in the Glass-Steagall Act by introducing legislation that would have allowed commercial banks to underwrite revenue bonds. The legislation was tacked on to legislation bailing out the thrifts. The SIA then asked the banks be registered with the Securities and Exchange Commission, in much the same manner as the securities industry. So the bill got caught in an old-fashioned congressional logjam. To get it out of committee, the section dealing with revenue bonds was dropped.
This coming year, the securities group will once again try to get Congress to legislate ''equal regulation'' into any changes in Glass-Steagall. ''We want equal taxes and equal regulation for everyone on the same playing field,'' Mr. Linton said. For example, he notes that banks can carry losses on their books for 10 years but the securities industry cannot. The banks can deduct the interest cost of carrying a municipal bond portfolio, while the securities industry cannot. And the insurance industry can set up pretax reserves, which the securities business cannot. These inequities, he argues, cannot be carried over to the securities business unless both industries are playing by the same rules. And if the banks are allowed to become stockbrokers, he would like like to see them join the clearinghouse organization, which is responsible for the financial markets' paper work.
So when the brokers convene their annual meeting this year at Boca Raton, they will be doing more than ''meetin' and greetin'."