WASHINGTON - Maintaining barriers between insured depositories and commercial firms will only serve to stifle banks, an executive from a giant data processing company told Congress Thursday.

"Banks really need to be able to compete," said Coley Clark, corporate vice president at EDS Corp., a General Motors Corp. subsidiary that provides services such as check processing to banks and thrifts.

"Information technology has already effectively removed the barrier" that Glass-Steagall and the Bank Holding Company Act attempt to impose, he added.

"Industrial and commercial firms are already providing all manner of financial services," Mr. Clark told the House Banking subcommittee on capital markets .

A bill introduced by the panel's chairman, Rep. Richard Baker, R-La., would allow a bank to affiliate with a nonfinancial company, including large enterprises such as Ford Motor Co.

"We are trying to regulate something that may not even be in existence anymore," Rep. Baker said about maintaining the current barricade between banking and commerce.

House Banking Committee Chairman Jim Leach, R-Iowa, whose Glass-Steagall bill would allow banks to affiliate with securities firms but not with nonfinancial companies, warned that combining commerce and banking could lead to massive concentrations of wealth.

Kenneth Whipple, president of Ford Financial Services Group, however, told the panel that the information superhighway would prevent such massive financial entities from developing.

"The barriers to entry into this business are lower than they've been for a long time because of technology," said Mr. Whipple. "The ability of nimble, technologically astute companies on a local basis to compete with giant juggernauts is better than it has ever been."

Gary E. Hughes, chief counsel of securities and banking for the American Council of Life Insurance, said his group did not support any of the Glass- Steagall proposals.

The combination of a recent Supreme Court decision allowing banks to sell annuities with provisions in Rep. Leach's bill effectively "allows banks to engage in insurance activities while prohibiting insurers from engaging in banking activities," Mr. Hughes said.

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