WASHINGTON -- The Federal Reserve on Monday granted BankAmerica Corp. expanded securities powers.
BankAmerica already had limited power to deal in securities underwriting through its section 20 subsidiary, BA Securities Inc., which it acquired through its merger with Security Pacific Corp.
The Fed approval allows it to move existing business into that subsidiary, as well as to expand to offer full-service brokerage activities.
Institutional Customers Affected
The Fed's move, which will primarily affect institutional customers, allows BankAmerica to:
* Act as agent in the private placement of all types of securities, including providing related advisory services.
* Buy and sell all types of securities on the order of investors as a "riskless principal."
* Provide securities brokerage and investment advisory services, both separately and in combination.
Difference over Firewalls
The Fed board unanimously approved the order. But governor Wayne Angell protested that one element of the approval - relating to cross-marketing firewalls between subsidiaries of a bank holding company -- "would be more appropriate for the board to consider in the context of a rulemaking" instead of an application.
In 1990, the board proposed modifying or removing the cross-marketing restriction for all activities of a section 20 affiliate.
No action was ever taken on that proposal, though.
Nonetheless, the Fed allowed BankAmerica to act through its bank broker-dealer subsidiary, BA Investment Services, as a riskless principal or broker for customers in bank-eligible securities that the section 20 firm underwrites or deals in.
