TAKING LOOK AT BANKS' REACH; FINANCIAL SECTOR PLAN SCALED BACK.
Retreating from its most ambitious idea - allowing banks to own manufacturers or other nonfinancial companies - the Clinton administration Wednesday introduced a long-awaited plan to revamp the nation's financial services industry.
For more than a decade, repeated attempts to overhaul banking legislation have collapsed from intense industry infighting. In deciding not to press for authority for banks to engage in virtually any business - a proposal that has drawn sharp criticism - the administration has provided the framework, analysts said, for a bill with solid prospects of enactment.
The plan, outlined Wednesday by Treasury Secretary Robert Rubin, is an attempt to reflect the deregulatory changes that have already swept through the marketplace, paced by the efforts of federal regulators that have allowed banks and Wall Street to move onto each other's turf.
In a speech at the Exchequer Club in Washington, D.C., Rubin predicted that increased competition in the securities, banking and insurance industries would produce savings of as much as $15 billion for consumers.
Financial industry groups gave the administration's outline cautious support pending its refinement over the next couple of weeks. ``The devil's in the details,'' said Paul A. Equale, senior vice president of the Independent Insurance Agents of America.
While Rubin signaled a retreat from the controversial proposal to allow banks to venture into a wide range of businesses, he did not abandon it all together. The administration's plan offers such ownership as one of two alternatives.
Rubin suggested that permission for banks be linked to a specified limit on nonfinancial activity, expressed in terms of total domestic revenue. He also said that Congress might want to bar affiliation between a bank and any of the nation's 1,000 biggest nonfinancial companies.
No percentage was mentioned, but the Treasury is expected to accept a limit of 25 percent on nonfinancial business.
Critics of commercial ownership by banks argue that such authority could lead to an overconcentration of economic power.
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|Publication:||Daily News (Los Angeles, CA)|
|Date:||May 22, 1997|
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