A sweeping measure that would revamp the nation’s financial laws, which barely cleared a House committee, faced a barrage of criticism Thursday from top regulators and members of another House panel now grappling with the package.
The nation’s top securities regulator said the legislation does not adequately protect investors and Federal Reserve Chairman Alan Greenspan warned that it goes too far in tearing down the traditional barrier between banking and commerce.
Late last month, the House Banking Committee rebuffed the earlier objections of Greenspan and others, narrowly approving a measure that would allow banks to merge not only with brokerages, insurers and other financial firms but also with commercial companies.
“We strongly support the bill’s approach to affiliations of banking, securities and insurance organizations,” Greenspan told a hearing of the House Commerce subcommittee on finance, which now is taking up the measure. “We are nonetheless concerned that the bill goes unnecessarily far at this time in mixing commerce and banking.”
Arthur Levitt Jr., chairman of the Securities and Exchange Commission, said the measure doesn’t adequately protect investors because banks selling mutual funds and other financial products wouldn’t be subject to the same requirements as securities firms.
The legislation in its current form “falls short of the mark,” Levitt testified.
Subscribe to the Coronavirus newsletter
Get the day’s latest Coronavirus news delivered to your inbox by subscribing to our newsletter.