The Bush Administration today formally presented its plan for the most sweeping overhaul of the nation's banking system since the Great Depression.
The proposal, the broad outlines of which had been widely known here for weeks, offers the nation's commercial banking system a competitive landscape unrestrained by many of the barriers and regulations that were installed by the Government after the national banking crisis in the 1930's.
The most important elements of the plan would allow commercial and investment banks to merge and would push down the barriers to interstate banking. It would also permit industrial companies to own banks.
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The plan, which had been supported by large banks but worried smaller institutions, rewards financially strong banks by giving them the authority to enter into new businesses, like investment banking.The amount of capital, or long-term investment, that a bank has is the criterion for determining financial strength, and those institutions that are deemed poorly capitalized would be put under tighter control of the Government.
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The main targets of the proposal are laws that were intended to curb speculative excesses that led to the collapse of the banking industry in the 1930's. These include the McFadden Act of 1927, which sharply limited interstate banking; the Glass-Steagall Act of 1933, which restricted the mergers of investment banks and commercial banks, and the Bank Holding Act of 1956, which prevented industrial companies from owning banks.
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John D. Dingell, a Michigan Democrat who is the chairman of the House Energy and Commerce Committee, said he would oppose the measure.
"Wall Street is a dry hole today, and even in the best of times it is an extremely risky business," Mr. Dingell said. "Allowing weak banks into the securities field or into insurance, which has solvency problems, will simply compound the problems of both."
Does't Dingell sound like a stick-in-the-mud?
What could possibly go wrong?
