August 22, 1994
TO: BOARD OF GOVERNORS NO. 86-94
FEDERAL LEGISLATION COMMITTEE NO. 28-94
FEDERAL LEGISLATION MEMBERS NO. 25-94
RE: "FINANCIAL SERVICES COMPETITIVENESS ACT" INTRODUCED
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House Financial Institutions Subcommittee Chairman Steve
Neal (D-NC) has introduced H.R. 4956, the "Financial Services
Competitiveness Act." This legislation, which is similar to
legislation proposed in the last Congress by the Bush
Administration, would establish a new financial services
regulatory structure based upon a diversified financial services
holding company concept. Under this structure, depository and
non-depository institutions could exist as separately-capitalized
subsidiaries within the same holding company.
This legislation would create a "two-way street" by allowing
the combination of banking with commercial operations within the
same corporate structure. The legislation also would exempt the
diversified holding company from the restrictions of the Glass-
Steagall Act, and would allow organizations owning banks to
conduct a full range of securities activities (including the
sponsorship and underwriting of mutual funds), through a
separately-capitalized securities subsidiary.
Chairman Neal is retiring at the end of Congress. In his
introductory remarks, he stated that he does not expect to
finalize this bill, but rather has introduced it to "facilitate a
debate addressing the basic structure [sic] problems that are the
result of outdated affiliation and activities restrictions
contained in the Bank Holding Company Act, the Glass-Steagall
Act, and various other laws."
In order to provide a forum for such debate, the Neal
Subcommittee may hold hearings on the legislation sometime this
fall. The Institute is expected to testify.
A copy of the legislation, a section-by-section summary, and
Chairman Neal's introductory remarks are attached for your
review. We will keep you informed as this matter develops. If
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you wish additional information, please contact the Legislative
Affairs Department at 202/326-5890.
This memo can also be found on FUNDS, the Institute's Fund
User Network and Delivery System, under "Legislative Affairs;
Washington Update."
Matthew P. Fink
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