The Independent Bankers Association of America Tuesday rebuffed a compromise offer from Rep. Richard Baker on his plan to allow nonfinancial firms acquire banks.
The Louisiana Republican, who has introduced sweeping financial reform legislation, asked the small-bank trade group whether it would drop opposition to his plan if commercial firms were prohibited from buying banks with less than $500 million in net assets.
"Simply put, our answer is 'no,' " replied IBAA president William D. Sones in an April 1 letter.
Mr. Sones said any mixing of banking and commerce would harm small banks and would increase risks to the financial system.
"Our concern is not that community banks will be acquired by commercial firms," he said.
Instead, the IBAA opposes Rep. Baker's bill, he said, because it would allow "massive concentration in our economic and financial system" and would be "anticompetitive and would act to the detriment of the American consumer, small business, agriculture, and the elderly."
Rep. Baker said Thursday he was disappointed in the IBAA's response.
"I was willing to protect what I considered to be their principal concern-that small institutions would be acquired by commerical firms," he said. "But they simply said 'no.' "
Rep. Baker's plan is identical to a bill introduced by Senate Banking Committee Chairman Alfonse M. D'Amato. Their proposal is by far the most aggressive among three leading financial modernization plans.
To build more support for reform, Rep. Baker said he plans to introduce a revised bill soon.