February 2, 1990
TO: BOARD OF GOVERNORS NO. 9-90
FEDERAL LEGISLATION MEMBERS NO. 3-90
RE: S. 2028, THE "FAIR TRADE IN FINANCIAL SERVICES ACT"
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Early this week, Senate Banking Committee Chairman Don
Riegle (D-MI) and Ranking Committee Member Jake Garn (R-UT) led a
majority of Senate Banking Committee members in introducing
S. 2028, the "Fair Trade in Financial Services Act". The bill
amends the International Banking Act of 1978 and the Securities
Exchange Act of 1934 "to provide for fair trade in financial
services." The bill would give the US government the power to
restrict access to US markets by foreign banks and securities
firms whose home countries discriminated against US companies.
S. 2028 represents a strong Congressional response to the
growing concern about the international competitive position of
US financial firms. In the face of increased foreign presence in
this country, the bill is also an attempt to gain "competitive"
access to foreign banking and securities markets. "It is
designed to be a market opening mechanism", according to Chairman
Riegle.
The Senate Committee thus joins its House counterpart in
exploring the "competitiveness" issue. As you may recall, the
House Banking Committee announced the formation of a "Task Force
on the International Competitiveness of U.S. Financial
Institutions." (See Institute Memo to Federal Legislation
Members No. 1-90 and Federal Legislation Committee No. 1-90,
dated January 16, 1990). The Task Force's final report is due in
July.
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Both Committees can be expected to consider whether laws
and regulations in the US or abroad act to the competitive
disadvantage of US financial institutions. It is in this context
that the debate on legislation to restructure the financial
services industry will continue.
Hearings on the bill are expected in the near future. We
will keep you informed as the matter progresses.
Julie Domenick Doerr
Vice President-Legislative Affairs
Attachment