Washington - Rep. Jim Leach doesn't plan to waste any time when the 104th Congress is called to order.
The incoming House Banking Committee chairman vowed on Monday to introduce no fewer than five bills on Jan. 3, the first day of the new Congress.
The measures will address Glass-Steagall reform, derivatives, fair trade in financial services, federal banking agency consolidation, and the repeal of a law that exempts municipalities from certain investment disclosures.
Mr. Leach unveiled his plans in these areas during a press conference on Capitol Hill. Though his positions on the issues had been widely known, the comments were the first public airing of his legislative agenda.
"Now we have a fairly good idea of what to watch for," said Joe Belew, president of the Consumers Bankers Association. "Hopefully there will be more of a predictability quotient during this Congress."
Knocking down some of the walls between commercial and investment vestment banking is the first and most important" goal on the committee's agenda, Rep. Leach said.
"There is nothing more risky to commercial banking than not to be allowed to do the kinds of things that the customer wants it to do," the Iowa Republican said. "The vast majority of these activities are not as risky as other bank activities."
Certain "very clear safeguards" must remain in place to ensure safety and soundness, Rep. Leach warned. The measure will not allow banks to use federally insured deposits in securities operations, and it may require some securities activities to occur in "separately capitalized subsidiaries," Rep. Leach said.
On regulatory consolidation, legislation is currently in the works to merge the Office of the Comptroller of the Currency with the Office of Thrift Supervision. "The OTS looks to me to be superfluous,' he said.
The importance of two of the bills on Rep. Leach's laundry list - pertaining to derivatives and municipal finance - may have been bolstered by the recent debacle in Orange County. The loss was caused in part by investments in derivatives.
Mr. Leach said that although the federal banking agencies may have adequate methods in place for regulating the use of derivatives, "very modest and restrained" strained" legislation will be necessary to unify their approaches.
"The commonality of the approach is of enormous significance," Mr. Leach said.
Rep. Leach also called for repeal of the Tower amendment, which was added in 1974 to the Securities and Exchange Act of 1934. The law prohibits the Securities and Exchange commission from requiring municipalities to file registration documents before issuing bonds.
"Municipalities do not have full disclosure," but they "ought to lead the way in full disclosure," Rep. Leach said.
