How Much More?
It was announced in the American Banker newspaper recently that the ABA (American Bankers Association) had withdrawn their support from the President's Banking Bill.
The reason, of course, is that the Banking Bill as it is now written takes away privileges once held by the banking industry, and also does not add any of the much needed reforms. The compromise now under consideration could lead to a bill that would roll back existing bank insurance powers as well as impose strict restrictions on any new authority to underwrite securities, according to writer Robert M. Garsson.
A friend of mine, commenting on the change of position of the ABA, said,"Well, I don't know that it's a good thing for my bank to be selling insurance and dealing in stocks. Maybe they ought to just stick to banking-you know-making loans and holding savings and paying interest and running checking accounts."
Unfortunately for the banking industry, this is the attitude of some of the lawmakers in Washington, D.C., too. I pointed out to my friend that it would be a good thing if all Sears did was run a retail store and sell great tools and appliances. And all Merrill Lynch did was sell stocks and bonds and deal in mutual funds. And all the Ford Company did was make great cars. But that isn't true. All of these corporations now run, in every sense of the word, a bank-without the restrictions and regulations and requirements placed on financial institutions.
It just isn't a level playing field. And in order to stay competitive, the financial institutions are going to have to be free to become as profitable as possible.
It's time for the banking industry to be able to grow and get on with business.
Copyright © 1991 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 2, No. 9, 11/91
First published on 11/01/1991