Rep. Henry B. Gonzalez of Texas, the top Democrat on the House Banking Committee, asked the Clinton administration last week to preserve "essential" protections in the Glass-Steagall Act.
In a Jan. 30 letter to Treasury Secretary Robert E. Rubin, Rep. Gonzalez advised "utmost caution" in drafting legislation that would allow commercial ownership of banks. "Times have changed, but human nature has not," Rep. Gonzalez wrote. "Many of our banking laws have been enacted in response to the excesses and improper conduct of the industry."
If Glass-Steagall is repealed, it should be accompanied by a reduction in deposit insurance for institutions that exercise new powers, Rep. Gonzalez wrote. The Fed Wire payment transfer system should also be protected from companies that might buy large banks. Rep. Gonzalez also advocated overhauling the banking agencies, strengthening firewalls and internal controls, and updating capital requirements.