House Commerce Committee Chairman Thomas J. Bliley, R-Va., said this week he will offer an amendment to Glass-Steagall repeal legislation that will require banks to move many securities activities into separately capitalized affiliates. He discussed his views on the issue in a statement to the committee; excerpts follow.
Commercial banking is no longer taking deposits and making loans. Today, banks are involved in a myriad of financial transactions in which capital is raised through the private placement of equity and debt. Banks issue negotiable instruments derived from the securitization of mortgages, assets, and commercial receivables. Indeed, to the extent that they have been permitted to do so through section 20 affiliates, banks are a significant factor in the underwriting of corporate debt and equity.