House adopts new banking-securities-insurance law

On November 4, by a vote of 362 to 57, the House adopted the Financial Services Overhaul bill IS 900). which effectively removed most of the barriers between banks, brokerage houses and insurance companies erected by the 1933 Glass-Steagall Act during the Depression and the Bank "ding Company Act of 1956.

Rep. Pete Sessions (R.-Tex) said the overhaul would increase market forces, drive down costs and broaden the number of potential customers for securities and other products.

"Americans spend more than $350 billion per year on fees and commissions for brokerage, insurance, and banking services. If increased competition yielded savings to consumers of just 5%, consumers would save over $18 billion a year.

"This legislation is designed to give all Americans the benefit of one-stop shopping for all of their financial services needs. New companies will offer a broad array of financial services products under one roof, providing convenience and encouraging competition. More products will be offered to more people at a lower price.

"As a result of this legislation, Americans will have more time to spend with their families and more money to spend on their children or to save safely for their future."

Rep. Dennis Kucinich (D.-Ohio), who was among the small minority voting against the bill, warned of privacy invasions because of an exception allowing a financial institution to provide nonpublic personal information to third parties contracted to market the institution's own products to its customers or to companies pursuing joint ventures with the financial institution. Others thought the privacy protections in the bill were adequate.

Rep. David Dreier (R.-Calf.) said the overhaul had one simple basic thing in mind: to provide consumers with a wider range of choices, while maintaining safety and soundness at the lowest possible price. It would also protect privacy, he said.

Among the protections in the law: Banks are required to have and disclose written privacy policies; banks must give customers the right to "opt out" of sharing their information with third parties; existing stricter state privacy laws are not preempted; telemarketers cannot receive deposit account numbers, credit card numbers and other information from financial institutions, and fraudulent calls to a financial institution to falsely acquire personal financial information are made criminal offenses. The overhaul also requires ATM owners to post fee notices on all terminals.

Rep. Spencer Bachus (R.-Ala.) said in 1933 Americans had to choose between gravel or dirt roads. "It we wanted to travel on an airplane, there were three-engine Ford tri-motor airplanes, biplanes.

"Now, Imagine traveling across the nation on gravel U.S. highways. Imagine how time-consuming that would be. Imagine how inefficient steam engines would be if they pulled our freight trains. Imagine flying home on the weekends in a biplane. That is what our banks and financial institutions are attempting to do every day with a law that was passed in 1933."

A "yes" vote was a vote to adopt the Financial Services Overhaul and repeat many of the Depression-era restrictions that strictly divided up the financial services marketplace into banking, securities and insurance segments. A "no" vote was a vote against repealing the old restrictions.

Copyright Human Events Publishing, Inc. Nov 19, 1999
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