WASHINGTON--Securities and Exchange Commission Chairman Richard Breeden said last week that opponents of a government securities bill "mischaracterized" the current law as it relates to banks.
The bill, which would have increased the SEC's authority over the governments market, was defeated last week by the House of Representatives.
Letter to Rep. Dingell
During debate on the measure, Mr. Beeden noted, opponents asserted that for the past 50 years bank regulatory agencies have been the central and exclusive regulators of all bank activities.
"This is simply not true as a matter of law, and the result, if it were true, would be highly adverse to the public interest," Mr. Breeden said in a letter to House Energy and Commerce Chairman John Dingell, D-Mich., whose panel wrote the chief provisions of the bill.
"If a bank officer commits murder, even on the premises of an FDIC bank, the local police and district attorney, not the FDIC, would conduct the investigation and any resulting prosecution," Mr. Breeden said. "If a bank engages in possible tax fraud, the IRS, not the Federal Reserve, would undertake a tax audit."
House Banking Committee Chairman Henry Gonzalez, D-Texas, objected to the bill on the ground that it would greatly expand the jurisdiction of the SEC at the expense of bank regulators.
Fraud Investigation
Mr. Breeden said the SEC long has had the power to bring an action against any person who engages in securities fraud, including fraud involving government securities, and added that in the case of bank violation of securities laws, "the SEC is the appropriate agency to investigate and take appropriate action."
The SEC chief said the position taken by Rep. Gonzalez and other members of his panel would "reverse 58 years of jurisprudence."
