May 17, 1991
TO: FEDERAL LEGISLATION MEMBERS NO. 5-91
RE: INSTITUTE TESTIMONY ON FINANCIAL SERVICES RESTRUCTURING
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Today, the Institute testified before the Senate Banking
Committee on the Administration's comprehensive bill to
restructure the financial services industry.
The Institute urged the committee to avoid the temptation
to enact legislation that simply repeals Glass-Steagall and
instead stressed the need for comprehensive reform which would
also allow commercial firms to affiliate with banks.
The Institute expressed it general support of the
Administration's comprehensive approach to restructuring and
endorsed provisions in the bill which would establish a two-way
competitive street for banks and securities firms, require SEC
regulation of bank mutual funds and other securities activities
and close the loophole for bank common trust funds.
The Institute took the opportunity to offer additional
suggestions to strengthen and expand the bill's investor
protection and firewall provisions. Specifically, the Institute
recommended that prohibitions be added to certain types of
conflict of interest transactions that can arise when a bank
affiliate acts as sponsor or adviser to a fund; it also pointed
out that protections should be added to prevent investor
confusion and other problems that can result from the marketing
of funds to the public by affiliates of insured depository
institutions. The Institute also expressed support for
subjecting all bank pooled investment funds to SEC regulation.
These hearings represented the twentieth day of Senate
Banking hearings in 1991. They are expected to end as the
Committee prepares to mark-up financial services legislation
beginning in mid-June.
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A copy of the Institute's oral and written testimony is
attached. Please call if you wish further information. We will
keep you informed of further developments.
This memo can also be found on FUNDS, the Institute's Fund
User Network and Delivery Systems, under Legislative Affairs,
Washington Update.
Julie Domenick Doerr
Vice President-Legislative Affairs
Attachment