Looking ahead to next year's congressional session, Treasury Under Secretary John D. Hawke Jr. on Monday outlined what he'd like to see in any banking bill.
First, he said, any financial services modernization bill must let banks offer insurance. "You should protect competition and not competitors," Mr. Hawke said a meeting sponsored by the Institute of International Bankers.
The Clinton administration, however, will not push legislation to merge the banking agencies. "Whatever one thinks about the structure of the regulatory agencies, that battle has already been fought," he said.
Without giving any details, Mr. Hawke said next year's banking bill must protect consumer privacy and make financial institution performance more transparent so investors can accurately judge the value of a company's stock.
Lawmakers worked all weekend so they could adjourn and start campaigning in earnest. Much of the banking agenda was not acted upon. Legislation to repeal the Glass-Steagall Act died this summer because special interests lost track of the bill's real purpose, according to Mr. Hawke.
"Financial modernization failed because it was too narrowly focused on resolving the intraindustry conflicts of today," he said. "We've got to get back to the longer-range context."
Mr. Hawke reiterated his support for allowing banks to conduct securities underwriting activities in subsidiaries of either the bank or the holding company.
Speaking at the same meeting, Sen. Robert Bennett, R-Utah, agreed that financial modernization will top the congressional agenda in 1997.
In addition to Glass-Steagall reform, Sen. Bennett said he expects Banking Committee Chairman Alfonse D'Amato to tackle the regulation of electronic money and ATM surcharges during the next Congress. Up for reelection in 1998, Sen. D'Amato will try to drive up his approval ratings with pro-consumer legislation, Sen. Bennett predicted.
Also at the meeting, Federal Reserve Board Governor Susan M. Phillips said she expects the central banks to quickly finalize a proposal allowing holding company affiliates to more than double their commercial underwriting activities.
"I'm hopeful the board will be able to consider final action as soon as the comments are evaluated," she said.