WASHINGTON - Rep. Richard H. Baker, chairman of the House Financial Services subcommittee on capital markets, is preparing to hold a hearing by spring on merchant banking issues.

Topics are to include a recent capital proposal by the Federal Reserve Board and other banking regulators.

The Louisiana Republican's spokesman said Tuesday that Rep. Baker is still determining the scope and range of the hearing but that he plans to hold it before comments are due on the capital proposal. Regulators issued the proposal Jan. 18, but its publication in the Federal Register has been delayed while the Bush White House reviews all regulations and proposals issued in the final days of the Clinton administration.

It is unclear whether Rep. Baker also will focus on a related merchant banking rule, issued Jan. 10, that sets limits on the holding period and management of equity investments and imposes a temporary cap on such activities until the capital plan is completed.

Rep. Baker had led other members of the former House Banking panel last year in warning federal regulators not to issue final rules on merchant banking without congressional approval. They complained that a proposed capital charge and other restrictions would make it more difficult for financial holding companies to engage in merchant banking than the Gramm-Leach-Bliley Act intended.

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