Rep. Marge Roukema Wednesday introduced legislation that would allow banks to affiliate with financial companies and would abolish the thrift charter by 1998.
The New Jersey Republican acknowledged that her bill has no chance of being considered before lawmakers adjourn at the end of September, but said Congress should use the measure as the basis for hearings next year.
"I strongly believe it is essential to lay the groundwork for this major policy debate," said Rep. Roukema, who chairs House Banking's financial institutions subcommittee.
Other key provisions in the bill:
*Prohibit ownership of insured banks by commercial firms.
*Allow bank holding companies to sell asset-backed securities and municipal revenue bonds from nonbank subsidiaries.
*Allow commercial and financial firms to create uninsured wholesale financial institutions.
A bi-partisan list of co-sponsors include Reps. Bill McCollum, R-Fla., Bruce Vento, D-Minn., David Dreier, R-Calif., Mike Castle, R-Del., and Floyd Flake, D-N.Y.
The bill was drafted in cooperation with the Alliance for Financial Modernization, an industry coalition that includes the American Bankers Association, America's Community Bankers, the Investment Company Institute, and the Securities Industry Association.
"The legislation we are introducing represents the work of a coalition representing a broad cross-section of the industry," she said. Still, Rep. Roukema noted that the lawmakers and trade groups do not support every provision in the legislation.
"I am painfully aware of how controversial the issues surrounding the financial services industry can be," she said. "To say the least, various sectors of the industry have had different and conflicting views on how best to go about modernization."
Paul A. Schosberg, president of America's Community Bankers, praised lawmakers for working with the coalition to draft the bill. "It's over a year in the making. There never has been a bill of this magnitude supported by such a broad spectrum of the industry."
