WASHINGTON -- The House Banking Committee yesterday deferred consideration of proposals to restructure the federal regulatory system overseeing the nation's banks.
The panel decided to delay action on the politically charged issue because it has yet to decided what new powers, if any, will be bestowed on banks. It is slated to consider that matter next week.
The current proposal would allow banks to be owned by commercial firms and would allow bank affiliates to underwrite securities and engage in insurance activities. The plan also would allow banks to open branches across state lines.
But amendments the panel will consider next week could scale back the scope of the new powers or add conditions that reduce the attractiveness of the activities to banking firms.
Following consideration of the powers issue, the panel will return to consideration of whether the regulatory structure should be altered.
The talk of revamping the structure has different federal regulators on guard against any loss of influence.
The panel already has deferred consideration of other tough issues.
During deliberations on the financial reform bill early Wednesday night, the committee decided to postpone indefinitely consideration of proposals that would limit the Federal Reserve Board's flexibility in utilizing the discount window.
One such amendment, offered by Rep. Tom Carper, D-Del., would prohibit the Fed from requiring that undercapitalized institutions pledge assets to secure discount window loans.
Another amendment, offered by committee Chairman Henry B. Gonzalez, D-Tex., would require that discount window loans be used only for short-term liquidity purposes, and not to prop up ailing institutions and merely postpone their death.