WASHINGTON - The 7,200 state-chartered banks not belonging to the Federal Reserve System would face serious restrictions under House Banking Committee Chairman Jim Leach's Glass-Steagall bill, warned the chairman of the state bank supervisors group.

James A. Hansen, who heads the Conference of State Bank Supervisors, told the panel on Wednesday that the Iowa Republican's measure would create a system in which federal law is the only avenue for innovation in the banking system.

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