Banks Push for Changes as Securities Bill Nears Vote

Banks lobbied hard Tuesday to kill consumer and other provisions they oppose in far-reaching legislation scheduled for a vote by the House Banking Committee this week.

The bill, proposed by Rep. Fernand J. St Germain (D-R.I.), chairman of the committee, grants banks new securities powers. But it includes requirements for serving poor consumers who banks consider too burdensome and imposes new restrictions on banks’ abilities to enter real estate and insurance.

Banking groups held a news conference in a major offensive to get the bill changed. But, according to aides to committee members, who spoke on condition of anonymity, St Germain had so far resisted efforts to weaken the consumer provisions of the bill.

At a news conference, the heads of five state banking associations and an official from a national organization of state bank regulators denounced the proposal.

But they said they still held out hope that it could be amended to more closely resemble the industry-backed bill passed overwhelmingly by the Senate four months ago.

St Germain Plan

Meanwhile, committee Democrats and Republicans met separately in closed sessions Tuesday afternoon in preparation for an open committee meeting today. Depending on how many amendments are offered and how hotly they are debated, a committee vote could come at that meeting.

However, Rep. Doug Barnard (D-Ga.) said Democrats alone were planning to offer a block of about 40 to 50 technical amendments and an additional 35 to 40 substantive amendments.

The St Germain proposal would permit subsidiaries of bank holding companies to underwrite corporate bonds, short-term corporate debt known as commercial paper, municipal revenue bonds and securities backed by mortgages and other consumer debt such as auto loans.

Banks would be allowed to sell, but not underwrite, mutual funds. The House proposal would not permit banks to sell or underwrite corporate stock, while the Senate bill requires Congress to vote on that issue by 1991.

St Germain’s bill would require banks to offer low-fee, low-service “lifeline” checking accounts for customers depositing between $25 and $1,000. It also would require banks to cash government checks such as Social Security and welfare payments, even for non-customers.

Amendments on Agenda

The draft bill also restricts banks’ abilities to offer real estate brokerage services and participate in real estate development as partners. And it would ban state-chartered banks from selling insurance, where permitted by state law, if they are owned by an out-of-state holding company.

Likely to be considered today, according to the aides, were amendments:

- To eliminate corporate bond underwriting, a move supported by the Securities Industry Assn., which represents securities firms, and proposed by Rep. Frank Annunzio (D-Ill.).

- To add mutual fund underwriting, by Barnard.

- To substitute the entire bill with one closer to the Senate-passed legislation, by Rep. Thomas Carper (D-Del.).

and - To lift the insurance restrictions from state-chartered banks owned by out-of-state holding companies, by Rep. Gerald Kleckza (D-Wis.).

- To postpone the decision on real estate powers for 30 months, by Rep. Bill McCollum (R-Fla.).

Banks long have sought securities powers, which they have been barred from since the Glass-Steagall Act was passed in 1933 in response to scandals arising from the 1929 stock market crash and a subsequent wave of bank failures.