Greenspan Backs Banking Overhaul Opposed by Rubin
WASHINGTON -- Federal Reserve Board Chairman Alan Greenspan, splitting with Treasury Secretary Robert Rubin, said he backs a financial-services bill being pushed by the Republican leadership in the House.</br></br>Mr. Greenspan's endorsement, expressed in a letter to House Banking Committee Chairman James Leach (R., Iowa), came one day after a top Treasury Department official criticized the bill as a backward step for the banking industry.</br></br>The Fed chief, however, said passage of the bill would be "an historic achievement that would update the increasingly antiquated laws that constrain the development and competitiveness of our financial system." Mr. Greenspan said the bill would remove "obsolete barriers" that prevent banks, securities and insurance companies from merging. The bill would require any bank that affiliates with other firms to do so within a holding company, over which the Fed would have regulatory authority.</br></br>The Treasury Department believes that a national bank should be able to conduct any new securities and insurance activities through an affiliate of the bank itself. That corporate structure falls under the regulatory jurisdiction of the Office of the Comptroller of the Currency, an arm of the Treasury Department.</br></br>In a letter to House Speaker Newt Gingrich (R., Ga.) released earlier this week, Mr. Rubin said flatly that "we oppose this bill and would not recommend its enactment."