Senate panel OKs reform of nation's banking laws

August 03, 1991|By Los Angeles Times

WASHINGTON -- The Senate Banking Committee approved yesterday a wide-ranging reform of the nation's Depression-era financial laws, approving interstate branching, giving banks expanded powers to affiliate with securities firms and ordering a basic, low-cost bank account for people earning less than $20,000 a year.

The bill was approved by a 12-9 vote and will go to the floor of the Senate -- where it faces an uncertain future -- when the body convenes next month after a summer recess. The House Banking Committee adopted a different version of the bill that would allow big industrial and commercial firms to buy banks.

Senate Banking Committee Chairman Donald W. Riegle Jr., D-Mich., was adamantly opposed to removing the traditional barriers between banking and commerce, and he persuaded his colleagues to accept his view.

The measure approved yesterday "contains within it the seeds of its own destruction," warned Sen. Paul S. Sarbanes, D-Md., who voted against the bill because, he said, it weakened the "fire walls" that will keep banks separate from their new securities affiliates.

The Bush administration expressed lukewarm approval of the bill and vowed to try to reshape it on the Senate floor.

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