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Banks (Finance)

Treasury Secretary Rubin Objects to House Banking Committee's Proposed Regulatory Plan

Strategic Insights

— 1 min read

Treasury Secretary Robert E. Rubin voiced strong objections to the House Banking Committee's plans to grant broad regulatory powers to the Federal Reserve as part of a bill allowing securities companies to merge with banks. The bill, championed by Representative Jim Leach, aims to repeal the Glass-Steagall Act of 1933, which prohibits such mergers. Rubin argued that the proposed arrangement would give the Federal Reserve excessive power by excluding other banking regulatory agencies.

Key Takeaways:

  • The House Banking Committee, led by Representative Jim Leach, is set to consider amendments to a bill that would allow securities companies to merge with banks, effectively repealing the Glass-Steagall Act of 1933.
  • Treasury Secretary Robert E. Rubin has strongly objected to the committee's plans, citing concerns that the proposed arrangement would give the Federal Reserve excessive power.
  • The Administration favors a Democratic amendment that would establish a National Council on Financial Services, coordinated by the Treasury, to regulate holding companies.
  • Representative Leach has resisted the Administration's attempts to consolidate regulatory control under the Treasury in the past, arguing that it would politicize bank regulation.
  • The Treasury Secretary wants to allow insurance companies to merge with banks, despite acknowledging it might be difficult in the Banking Committee.
  • The committee is expected to approve the bill and send it to the House Commerce Committee and the House floor, possibly as early as Wednesday or Thursday.

Statistics:

  • The Glass-Steagall Act of 1933 prohibits securities companies from merging with banks.
  • The House Banking Committee plans to consider over a dozen amendments to the bill.
  • The Federal Reserve would have broad regulatory powers under the proposed arrangement, excluding other banking regulatory agencies.
  • The Administration's preferred amendment would establish a National Council on Financial Services to regulate holding companies.
  • Insurance companies have limited influence in the Banking Committee.

Sources:

  • "Rubin Opposes Plan To Give Fed Broader Powers" by an unattributed author, published on an unspecified date in an unspecified publication.

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