Financial Walls Tumbling
In a few months we may look back at the 20th century and ask why we had to use such words as "banks," "insurance companies," or "stock brokers."Skip to next paragraph
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These separate industries will no longer need to be separate under a compromise worked out last week between top Republicans in Congress and the Clinton administration to pass a landmark bill regulating financial services.
The deal - 19 years in the making - would let these businesses blend into one-stop financial shops. The bill would overturn the 1933 Glass-Steagall Act which was passed to prevent a market crash like that in 1929 but has long been out of date under modern market safeguards.
The bill reflects the markets-know-best trend of recent decades. Like deregulation of airlines in the 1970s, the breakup of the telephone monopoly in the 1980s, and the deregulation of telecommunications in 1996, America's financial industry would see a heavy hand of government lifted.
Huge economic forces will be unleashed, hopefully without financial power becoming concentrated in a few big corporations. Mergers will become as common as burgers. Consumers should brace for a wave of telemarketing and sales pitches as the players in the world's biggest financial industry competes for market share in one another's turf.
A key last-minute political compromise was over how to ensure people in poor communities still receive loans from local banks. Smaller banks were given some slack from such rules while community groups which receive money from banks must disclose how they spend it. These steps seem reasonable.
Final passage of the bill will hopefully reduce the massive flow of campaign money from financial institutions which tried to influence it.
And the difficult compromises needed for this important legislation shows there's hope that Congress and President Clinton can still work together for the rest of his term.
(c) Copyright 1999. The Christian Science Publishing Society