Bill Would Ease Securities Registration for Holding Companies

Tuesday applauded a measure that would free bank holding companies from a tangled web of state and federal investor laws. State and federal registration requirements for securities "are a prime example of duplicative regulation that increases the costs of raising capital without generating offsetting benefits," said Charles C. Cox, who was acting SEC chairman in 1987. Mr. Cox is now senior vice president of Lexecon Inc., a Chicago consulting firm. At a hearing before the House Commerce subcommittee on telecommunications and finance, the former regulators gave their views on a bill that would replace most state securities regulations with a uniform set of federal laws. By doing so, the measure would cut compliance costs for bank holding companies, which often issue stocks and bonds to raise capital in more than one state. The measure, sponsored by subcommittee Chairman Jack Fields, R-Tex., would also allow banks to lend more on securities purchases. Additionally, the measure mandates that broker-dealers are responsible only for the investment decisions of institutional investors if there is a prior written agreement. Institutional investors are defined as those with portfolios of at least $10 million. That provision drew fire from Rep. Ron Klink, D-Pa., who said it would "endanger investors." The subcommittee will hold two more hearings on the legislation. On Nov. 30, SEC Chairman Arthur Levitt and Federal Reserve Board Chairman Alan Greenspan will testify before the panel. The American Bankers Association will testify Dec. 5, along with securities and consumer groups.