Illinois Insurance

The leaders of major money center banks are the strongest of the management proposals for a revision of the banking system - especially the exemption for banks to expand across the country and their broad discretion, as the sale of securities Securities and insurance.

“The fundamental problem with investment bankers is the colossal overcapacity,” said Thomas C. Theobold, the chairman of the Continental Bank of Illinois. Written in the latest edition of the Journal of Applied Finance, he added: “We have no more than 10000 independent banks, because the market needs 10000 or support banks. We have because banks were strictly regulated and almost completely isolated from normal market forces. ”

And at a conference on DGS insurance Pace University in New York this week, Thomas G. Labreque, the chairman of Chase Manhattan Corporation, spoke about the regulatory limit of commercial banks face increasing competition from the “non-bank banks -” - The commercial and industrial enterprises, which account for about financial services.

“We lost market share captive finance companies like General Credit Corporation and General Motors Acceptance Corporation and non-banking financial companies such as American Express, investment firms and global combinations such as Goldman and Sumitomo - Credit Suisse First Boston, “Mr. Labreque said. “Take American Express, for example. He owns a bank, the FDIC, deposits insured. It has a thriving business credit card. In addition, it owns, Shearson Lehman Hutton, an investment bank and IDS-Versicherungs-Gesellschaft. “But such an undertaking, he says, were not” get their hands on the regulations on bank holding companies are exposed .

Critics management of the spirit of proposed location of banks, especially those with weak capital positions, acquire new skills. In its report on the deposit guarantee schemes of insurance, called “A strategy for reform”, the General Accounting Office, which reports to Congress, stressed the need to strengthen surveillance of banks and increasing its capital , Reserve ratios, before it should be allowed Expansion in other areas.

The G.A.O. wants to “son of travel, forcing the regulatory authorities, steps to take if banks should intensify their own funds are low-emission credit or interest rates to take unacceptable risks. Invites GAO also on hand to examinations per year and more bank auditor, and it invites more stringent accounting rules and early disclosure of auditors to ensure better obey. It promotes risk-based premiums, would be scrupulously banks reward and punish lightly.

Steven M. Swaim, lace, the team that prepared the GAO report, said the Peace Conference that “in our competency assessment banks should not be extended after the reforms are taken.” Even then, and only good for banks capitalized on holding companies on a case-by-case basis, it should lift the restrictions Congress for International and the Bank in the phase of view, the powers for banks, securities and insurance - Companies which GAO said.

Charles A. Bowsher, the Comptroller General, said these new powers should be separated in partnership with “firewalls” conflicts of interest to avoid. Bryan Lowell McKinsey & Company promotes the use of bank holding companies, which would be divided into a banking group along traditional lines, with loans is limited to individuals and small and medium enterprises, and a finance company and a major bank.

Bankers fear that the regulator to regulate, it is excessive and unreasonable in comparison with non-bank banks. John S. Rippey, Senior Vice President and Director of the Association Legislative Bank holding companies, said the need for reform must have two main ingredients: market regulation “associated with” better and more sophisticated surveillance. He welcomed the G.A.O. Report to provide a valuable two starts.

For this, GAO, as the administration supports “too much doomed to fail” doctrine to avoid breaking big banks would endanger the whole financial system and take down “any filing insurance with him. But the GAO difference with the administration in its proposal that commercial and industrial enterprises are encouraged to their own banks. Congress is afraid of the excessive concentration of power and is probably the junk mail of administration proposal.