ABA Votes Against House Bill To Achieve Financial Reform

The American Bankers Association voted Monday to oppose financial modernization legislation pending in the House unless lawmakers make significant changes.

"There is strong consensus throughout the banking industry that this bill needs reconstructive surgery, not just cosmetic changes," said Walter A. Dods Jr., ABA president and chairman of First Hawaiian Bank.

The decision was approved unanimously by more than 300 bankers and state association executives attending the ABA's annual government relations conference in Colorado Springs. The ABA staff has previously criticized provisions in the bill, but the association had not taken a formal position.

The ABA would change its position if lawmakers eliminate provisions that weaken the national bank charter, said Donald G. Ogilvie, the group's executive vice president.

For instance, the ABA opposes creation of the National Council on Financial Services, which would settle disagreements between financial services regulators. "The council would be a clumsy, bureaucratic monstrosity," Mr. Ogilvie said.

Bankers also object to a measure that would allow the Federal Reserve Board to treat nonfinancial firms that acquire banks differently than conventional bank holding companies.

Other provisions opposed by the ABA would prohibit bank operating subsidiaries from underwriting insurance or engaging in merchant banking and require banks that merge with securities, insurance, or nonfinancial firms to offer low-cost checking accounts.