WASHINGTON -- Senate Banking Committee Chairman Donald W. Riegle Jr., a supporter of allowing commercial banks to underwrite municipal revenue bonds. said yesterday he will not seek reelection next year to the Senate seat he first won in 1976.

The 55-year-old Michigan Democrat made the surprise announcement on the Senate floor saying he wanted to spend more time on health-care reform after his term expires next year. The new chairman will probably be Sen. Paul Sarbanes, D-Md., who is second in seniority on the Banking Committee.

Riegle has supported legislation to undo the Glass-Steagall Act, which separates investment banking and commercial banking. Repeal of the law would allow commercial banks greater involvement in the securities business.

The senator, however, is not widely regarded as a leader in the push for reform of bank securities laws.

In 1991, the last year Congress seriously considered legislation to overhaul Glass-Steagall, Riegle expressed regret that lawmakers chose to eliminate provisions of bank reform legislation that would have allowed banks into the securities business.

The provisions were eliminated because many members of Congress were concerned about giving banks broader powers when the Federal Deposit Insurance Corp.'s Bank Insurance Fund needed recapitalization.

Riegle said at the time that because Glass-Steagall's prohibitions on bank involvement in the securities business had already been breached, Congress would ultimately have to step in. "There will come a time when we have to deal with this issue," he said.

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