House Speaker Newt Gingrich made clear in a letter last week that Congress should decide bank securities powers, not the Federal Reserve.
Rep. Gingrich composed the note to House Banking Committee Chairman Jim Leach following a Dec. 7 meeting with chief executives from five big banks. A few of the bankers walked away convinced the speaker supported dumping Rep. Leach's stalled Glass-Steagall repeal bill and asking the Fed to accomplish the same goal by raising Section 20 underwriting limits.
Not so, Rep. Gingrich said in his Dec. 13 letter. "I have no such intention. I prefer passing the Glass-Steagall bill in as close a consensus position as possible so that Congress will ultimately make the policy determinations on these important issues and not regulators."
Section 20 of the Glass-Steagall Act allows banks to underwrite "nonpermissible" securities such as corporate debt and equities, but revenue from those products must be limited to 10% of permissible securities, such as municipal and Treasury bonds.