Federal banking regulators are objecting to a Securities and Exchange Commission proposal that would implement the broker-dealer provisions of the Gramm-Leach-Bliley Act.
The proposal would define the extent to which banks may engage in trust, fiduciary, custodial, and similar activities without submitting to the regulatory strictures that the SEC applies to brokers.
In a letter Friday to the SEC, Federal Reserve Board Chairman Alan Greenspan, Comptroller of the Currency John D. Hawke Jr., and Federal Deposit Insurance Corp. Chairman Don Powell laid out their extensive disagreements with the proposal.
"We believe that the proposed rules reflect a profound misinterpretation of the language and purposes of the 'broker' exceptions in the GLB Act," the letter said. The plan "would require banks to make substantial changes in the way they conduct well-established and already highly regulated lines of banking business and would impose a new, SEC-created regime of extraordinarily complex requirements and restrictions on long-standing banking functions and relationships."
