While the American Bankers Association supports reforming provisions of the Glass-Steagall Act, several members of the association's Community Bankers Council said they don't want its wholesale repeal.
"I think generally banks are in favor of repeal of Glass-Steagall," said council member Sherran Blair, president and chief executive officer of $50 million-asset First Community Bank, Columbus, Ohio.
But Thomas E. Welle, president of $205 million-asset First National Bank of Bemidji, Minn., said the Depression-era law probably shouldn't be eliminated altogether because of the firewall it built between securities underwriting and deposit gathering and lending.
Glass-Steagall was enacted in 1933 to force a separation between commercial banking and investment banking.
But in recent years, banks have chipped away at it, for example, by gaining approval to underwrite limited amounts of asset-backed securities, corporate bonds, and commercial paper through holding company affiliates.
"I think Glass-Steagall has sort of been eroded away anyway," said Scott L. Graham, chairman and chief executive officer of $120 million-asset First National Bank and Trust Co. of Broken Arrow, Okla.
As long as securities underwriting is separated from deposits, "I think banks should have the right to do brokerage," he said.
Waymon L. Hickman, president and chief executive of $460 million-asset First Farmers & Merchants National Bank, Columbia, Tenn., supports banks' selling investment and insurance products, particularly after a Tennessee Bankers Association survey found that 63% of consumers want more investment and insurance products offered at their banks.
"We feel that offering these additional products and services would not adversely affect safety and soundness," he said.
This year, House Banking Committee Chairman Jim Leach, R-Iowa, has introduced a bill to repeal Glass-Steagall provisions separating the commercial and investment banking industries.
Companion bills introduced by Senate Banking Committee Chairman Alfonse D'Amato, R-N.Y., and Rep. Richard Baker, R-La., would go further, also eliminating barriers between banking and commerce.