SEC Urged to Ease Bank Oversight Plan

Members of the Senate Banking Committee are urging securities regulators to revise a plan to start overseeing the broker- age services that banks offer, calling the current proposal “burdensome and wholly unjustifiable.”

A letter signed by 14 senators advised the Securities and Exchange Commission to rewrite its proposed regulation and invite public comment on the revision. The banking committee has 20 members.

“We strongly urge the commission not to finalize the proposed regulation,” said the letter, dated Friday.

The committee’s opposition threatens to further delay implementation of parts of the 1999 Gramm-Leach-Bliley Act, which called for SEC oversight of some banks that offer brokerage services.

The Federal Reserve has twice opposed SEC proposals to begin regulating the banks, which now fall under the Fed and other regulators.

The SEC had no comment on the letter, spokesman Matt Well said.

The SEC proposal as drafted would let banks avoid the agency’s oversight if their trust departments aren’t paid chiefly in commissions and if bank employees who refer customers to affiliated brokers get fees of less than $25.

About 8,000 banks would be able to avoid SEC oversight because each holds less than $500 million in assets.

SEC Chairman William H. Donaldson might face questions on the proposal, known as Regulation B, when he testifies before the Senate Banking Committee on Wednesday.