WASHINGTON - If elected President, Gov. George W. Bush will order a comprehensive review of the regulations - including merchant banking opportunities and privacy protections - written to implement the Gramm-Leach-Bliley financial modernization law, according to his closest economic adviser.

"A major priority of a Bush Treasury Department will likely be a complete review of the post-Gramm-Leach-Bliley regulations with a goal of completing and improving them where possible," said Lawrence B. Lindsey, a resident scholar at the American Enterprise Institute.

In response to questions from American Banker, Mr. Lindsey singled out banks' entry into merchant banking as one of the new powers a Bush administration would critique.

"Certain rules, such as the Federal Reserve Board-Treasury Department merchant banking proposal, have been highly controversial and will need to be evaluated," said Mr. Lindsey, a former Fed governor and adviser to the Reagan and Bush administrations.

Mr. Lindsey, 46, has emerged from his private scholarly and consulting life to dispense economic advice - usually on a daily basis via e-mail - to Gov. Bush. His name regularly circulates as a logical Bush choice for Treasury Secretary or National Economic Council director.

Gov. Bush and his economic team do not have any plans to shake up major banking policy - but they are not closing any doors either.

In the hot-button debate over privacy, a Bush administration would consider tougher "opt-in" rules requiring companies to get explicit customer permission before sharing certain information. But not before it examined how well current rules protect private data, Mr. Lindsey stressed.

The current law gives customers only a chance to protect their data from being shared with companies that are not affiliated with their bank.

"I believe a Bush administration would support targeted restrictions, including an 'opt-in' approach on sharing health or medical information," Mr. Lindsey said. "Likewise, I could envision the new administration supporting targeted restrictions on the government's use of information related to individuals."

He emphasized that a Bush administration "would likely give these requirements time to work before considering new federal legislation."

If Gov. Bush were to push for additional privacy laws, they would not be industry-specific, said Mr. Lindsey, a Harvard PhD economist. "Instead of targeting the financial industry," a Bush administration "may want to target certain categories of information for special treatment related to privacy, rather than broadly restricting an industry group," he said.

"In general, I believe targeting restrictions to certain categories of sensitive personal information makes more sense and is more effective … than sending out millions upon millions of privacy notices to industry customers that will largely go unread."

Mr. Lindsey said in an interview that Gov. Bush personally is nervous about making online credit card purchases, but that he has no hesitation about making the development of e-commerce, including Internet banking, a major theme of his administration.

"I believe that the new administration will be far more aggressive in seeking to liberalize the authority for e-banking and other high-technology investments by financial holding companies," Mr. Lindsey said.

While the Democratic candidate, Vice President Al Gore, has been heralding an economic plan that promises tougher enforcement of Community Reinvestment Act requirements and a crackdown on predatory lenders, Gov. Bush has publicly been quieter on those issues.

However, the matters would not be ignored by a Bush White House, Mr. Lindsey said. He pointed to the governor's support of housing and other community initiatives in Texas as an example of the "enthusiasm and commitment to community development" that he would bring to the presidency.

"A Bush administration will look to create incentive-based approaches to community development activities," Mr. Lindsey said. "A Bush administration would vigorously enforce the laws on the books related to the Community Reinvestment Act, and I do not see the … administration proposing legislation to dramatically alter or repeal CRA."

Supporting the status quo for CRA includes opposing its extension to financial institutions that are not federally insured, Mr. Lindsey said.

On predatory lending, Gov. Bush would likely take a more moderate tack than Senate Banking Committee Chairman Phil Gramm, a fellow Texan, who has questioned whether such practices exist.

"It would seem prudent for a new administration to evaluate [existing] regulatory initiatives to determine whether problems in the mortgage process can be addressed under the existing legal and regulatory format, or whether new laws may be necessary," Mr. Lindsey said.

He stressed, though, that he does not "believe that a Bush administration will see new laws as necessarily the first option in this area."


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