The savings and loan crisis should not deter Congress from permitting commercial banks to venture into the insurance and securities industries, Treasury Secretary Nicholas F. Brady said today.
"I don't think we ought to take the thrift debacle and make it such a big factor in our minds that we don't face the issues in the banking industry," Brady told the Senate Banking Committee.
"We learned all too painfully from the thrift crisis that a crucial protection for the taxpayer is requiring firms to have a substantial amount of their own money at risk to absorb losses," he said.
"We will not propose changes to the financial services regulatory structure that would increase the taxpayers' exposure," he said.
The thrift industry was deregulated without requiring S&L; owners to risk more of their own money, he said. Consequently, any expansion of bank powers ought to be linked to strong capital requirements, he said.