Under all the leading financial reform bills, banks would gain significantly broader securities powers.

The plum: Banks could underwrite municipal revenue bonds, an increasingly popular fund-raising vehicle among local governments.

But while the various reform plans offer advantages, they also open the door to Securities and Exchange Commission oversight of banks.

For example, the legislation offered Wednesday by House Banking Committee Chairman Jim Leach would force banks to register as broker- dealers and investment advisers with the SEC, a move banking trade groups are lobbying against.

Even though nearly all of the roughly 4,500 banks with investment operations register with the SEC, requiring registration robs banks of needed flexibility in structuring their operations, according to Larry P. LaRocco, managing director of the ABA Securities Association.

"We have fought any reaching in by nonbanking regulators," said Mr. LaRocco. "Exemption from SEC oversight has been a traditional banking practice and has posed no safety and soundness problems."

But that may be the price banks have to pay to get the broader bill, which would tear down the legal barriers between banks, securities firms, and insurance companies.

Small banks are itching for the authority to underwrite municipal revenue bonds because many local governments are moving away from general obligation bonds, said Karen Thomas, regulatory counsel for the Independent Bankers Association of America.

The Securities Industry Association on Wednesday announced it would fight the change. "We ought not increase the amount of risky activity conducted in an insured bank," said SIA lobbyist Steve Judge.

Mr. Judge said letting federally insured banks conduct securities activities from within the bank amounts to a government subsidiary that provides a unfair advantage and risks taxpayer funds.

SEC Chairman Arthur Levitt, too, has repeatedly called for lawmakers place all bank securities operations under SEC oversight. Rep. Leach attempted to compromise by requiring banks to register with the SEC.

But most banks have entered the business by voluntarily establishing SEC-registered affiliates, said Robert M. Kurucza, partner at Morrison & Foerster. He complained that banks might be forced to obtain licenses for many nonbrokerage employees.

"This seems like regulatory overkill to subject so many employees to rigorous licensing requirements," he said.

According to Mr. Kurucza, a proposal by the National Association of Securities Dealers would require any bank employee to have a brokerage license before referring customers to a securities affiliate.

Rep. Leach's bill does include a number of exemptions from SEC registration aimed at banks with limited securities business.

Banks that offer trust services, sweep accounts, and employee benefit plans would escape SEC oversight as would institutions underwriting only general obligation bonds and government securities.

The SIA argued the exemptions go too far.

"We see no reason to exempt banks from any broker-dealer requirements," Mr. Judge said.

Allowing banks to operate under different rules is confusing to customers, he said. He also said bank regulators may be tempted to ease capital rules for brokerage operations to give banks a competitive advantage, he said.

"There is potential for different regulation," he said.

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