Brokerages End Opposition to Banks in Field : SIA Won’t Fight Repeal of Glass-Steagall Act

Wall Street leaders are increasingly concluding--and admitting--that they aren’t going to win their decade-long battle to keep banks out of the stocks and bonds business.

The latest sign of their retreat from the lobbying effort came here Wednesday when the head of the Street’s main trade group said the organization no longer opposes repeal of the Glass-Steagall Act of 1933.

The measure, one of many financial reforms instituted during the Depression, set sharp boundaries between the financial services that banks and brokers could offer.

But in more recent times, institutions of both types have been making intense assaults on each other’s turf.

The Securities Industry Assn. would “like to see Glass-Steagall resolved,” said its chairman, John Bachmann, who is also managing principal of the brokerage firm Edward D. Jones & Co. in St. Louis.

“We’d like to get that behind us,” he said.

Greenspan Opposes Ban

The SIA’s current position now closely matches that of many regulators, who argue that Glass-Steagall restrictions have outlived their usefulness and are unnecessarily restrictive.

Addressing the group’s annual convention Wednesday, Federal Reserve Board Chairman Alan Greenspan repeated his belief that “it is in the public interest that banks no longer be so circumscribed in their securities activities.”

The brokerage group qualifies its apparent acquiescence to this form of deregulation. For example, the brokers argue that firms of any type that take bank deposits and also sell securities such as stocks do so through separate subsidiaries kept apart by firm protective barriers.

The brokers say bankers should not be able to use federal deposit insurance, for instance, to gain a competitive advantage in marketing relatively risky investments such as stocks.

The SIA also urges that financial firms of all varieties be subject to “regulation by business.”

In other words, bank activities involving stocks and bonds would be overseen by the Securities and Exchange Commission, which now regulates traditional brokerage activities.

Edward O’Brien, the SIA’s president, said any move to dismantle Glass-Steagall should proceed at a careful pace, in the context of other financial problems. In particular, he said regulators probably ought to deal first with the issue of numerous troubled savings and loan institutions.