The Treasury Department Thursday urged House members to oppose financial reform legislation that is expected to go to the floor Tuesday.
According to a 17-page document detailing the administration's objections, the legislation "would hinder banks from responding to changes in the marketplace and harm consumers by limiting improvements in services and lower costs."
The Treasury's top complaint: The bill would force banks to conduct new activities in holding companies affiliates, rather than direct subsidiaries.
Limits on new activities would also undermine the Community Reinvestment Act by prodding banks to shift bank assets into holding company affiliates. "This would result in a transfer of assets beyond the purview of CRA," according to the paper.
The Treasury also derided a provision that would eliminate a legal precedent that requires judges to defer to federal banking regulators in disputes with state officials.
Another provision under Treasury attack would preserve current restrictions prohibiting banks from basing insurance sales operations in communities with more than 5,000 residents. The department also opposed a provision that would prevent nonfinancial firms from acquiring a single thrift.
The Treasury also complained that the bill would render the thrift charter useless by restricting the right of unitary thrift companies to own nonfinancial businesses.