April 30, 1990
TO: BOARD OF GOVERNORS NO. 32-90
RE: INSTITUTE TESTIMONY ON GLASS-STEAGALL REFORM LEGISLATION
__________________________________________________________
On April 24, the Institute testified at a hearing before
the United States Senate Banking Committee. The hearing was one
of a series being held by the Committee on legislation to
modernize the regulation of financial services.
The Institute's testimony marked the first public
presentation of the affirmative legislative proposal approved by
the Board in January. The testimony stressed four aspects of
that proposal, which the Institute stated should be part of any
comprehensive proposal: (1) a "two-way street", that would allow
banks and securities firms to offer all types of financial
services, (2) in order to protect federal deposit insurance, a
combination of firewalls and a "narrow bank", (3) functional
regulation and (4) special mutual fund firewalls.
The Institute's testimony also emphasized the need for
financial services restructuring to be addressed in a
comprehensive manner and in Congress. This was contrasted with
the piecemeal deregulation effected by regulatory agencies, such
as the Comptroller's recent proposal to allow mass-merchandising
of bank common trust funds.
Copies of the Institute's written and oral statements are
attached.
Craig S. Tyle
Associate General Counsel
Attachment