February 14, 1989
TO: BOARD OF GOVERNORS NO. 10-89
FEDERAL LEGISLATION COMMITTEE NO. 3-89
FEDERAL LEGISLATION MEMBERS NO. 4-89
RE: DIXON REINTRODUCES PROXMIRE BANKING BILL
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Senator Alan Dixon (D-IL) introduced S.305, the "Proxmire
Financial Modernization Act of 1989." The bill is nearly
identical to one passed by the Senate last year; it again grants
bank holding companies, through securities affiliates, the
authority to underwrite most securities, including mutual funds.
(See Institute Memo to Board of Governors No. 19-88, Federal
Legislation Committee No. 1-88, and Members One Per Complex
No. 13-88.) Senator Dixon was joined in sponsoring the bill by
Senators Garn, Graham and Wirth.
The notable change in the bill is that corporate debt
underwriting is no longer delayed for six months; this reflects
the January 18 Federal Reserve Board decision to permit bank
holding companies to engage in underwriting corporate debt on a
limited basis.
The provisions which permit bank entry into the mutual fund
business remain the same: permission for banks to distribute or
"sell" funds directly is granted immediately; permission for bank
holding companies to sponsor and underwrite mutual funds through
a securities affiliate is granted 180 days after enactment.
Last year, the Proxmire bill was passed by the Senate but
was never considered by the House of Representatives.
Copies of Senator Dixon's and Senator Garn's Congressional
Record statements are attached. If you have any questions,
please do not hesitate to call.
Julie Domenick Doerr
Vice President-Legislative Affairs
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