SARATOGA SPRINGS, N.Y. -- Despite the banking industry's record 1993 profits, Rep. John J. LaFalce, D-N.Y., is concerned about its ability to compete with nonregulated financial companies.
Addressing the annual convention of the New York State Bankers Association Monday, Rep. LaFalce said the industry has been hamstrung by outdated regulations and inconsistent supervision.
"Unless we act to bring necessary change, I think our banking industry is going to be left behind," he said. Rep. Lafalce is the House Banking Committee banking committee's third-ranking Democrat.
Says Laws Cost Banks
Rep. LaFalce said the industry is an "anachronism," and added that banking franchises have lost value in recent years because of laws preventing banks from expanding nationwide and from selling products such as securities.
He said he recently wrote Federal Reserve Board Chairman Alan Greenspan, urging him to use his authority to increase the industry's securities powers.
Rep. LaFalce, a longtime advocate of mofdernization in the financial industry, said progress is being made. Interstate branching legislation may clear Congress by the July 4 recess, he said, and a community development bank bill could clear Congress around the same time.
Eased Regulations Proposed
Both the House and the Senate version of the community development bank bill contain provisions aimed at easing burdensome bank regulation.
"The momentum has picked up," he said.
Rep. LaFalce criticized the community development bill on grounds that the $382 million earmarked for the program isn't enough. He said the figure is an "embarrassing" amount of money.