Dingell Bill Would Be Blow For Morgan

If Rep. John Dingell gets his way, one of J.P. Morgan & Co.'s engines of growth in the 1990s - underwriting public stock and bond offerings -- could sputter.

The Michigan Democrat aims to roll back the limited securities underwriting powers recently granted to Morgan, Bankers Trust New York Corp., and a handful of other commercial banks.

For now, though, analysts and institutional investors don't sound too concerned. They doubt the powerful Michigan Democrat will prevail.

And while a Dingell victory would be harmful, it would not be catastrophic for Morgan shareholders.

Luster Could Fade

"If Dingell pulls the rug out from Morgan, the stock goes down, but it wouldn't be a 10% or 15% hit," said one institutional shareholder.

Still, such an outcome would take some of the bloom off the Morgan rose.

"It's not something that would cause us to exit the stock, but we would take it into consideration in assessing the extent of our exposure," the institutional investor said.

Among commercial banks, Morgan stands the best chance to break into the ranks of major underwriters, because of its wealth of corporate relationships.

But by the same token, Morgan has the most to lose if Rep. Dingell succeeds in eroding the underwriting powers of commercial banks.

The Federal Reserve began granting those powers in 1989 through a loophole in the Glass-Steagall Act of 1933, which was intended to separate commercial from investment banking activities.

As part of the Bush administration's banking reform legislation, Glass-Steagall would be abolished altogether.

The bill is now before the House Energy and Commerce Committee, chaired by Rep. Dingell, a long-time foe of Glass-Steagall repeal.

Big Week for Dingell Bill

In the latest twist of the complicated legislative manueverings, the committee this week will consider Rep. Dingell's own bank reform bill, which repeals Glass-Steagall, but creates new limitations that are more onerous than the existing ones.

For its part, Morgan professes to be unconcerned.

"We do not see evidence that there is a broad base of support for Dingell's view, nor do we have a heightened sense that those views will prevail," a Morgan spokesman said.

Meanwhile, Morgan shares continued to rise Friday on expectations of strong trading results for the third quarter. After adding $2.125 a share on Thursday, the stock climbed $1.125 in extremely heavy trading, to close the week at $58.25.

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