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The American Banker

Banking Panel Members Dig Legislative Foxholes for 2003

November 14, 2002, Thursday

BY MICHELE HELLER

DATELINE: WASHINGTON

Three key House Financial Services Committee members on Wednesday drew lines in the sand on financial privacy,
deposit insurance reform, and regulatory restructuring.

Rep. Barney Frank held his first news conference as the incoming top Democrat on the panel, saying his priorities for
next year include pushing for tougher financial privacy laws, fending off what he expects will be Republican efforts to
water down the Sarbanes-Oxley corporate governance law, and looking into the way investment banks conduct research
and allocate initial public offerings.

"It is time for us to do a systematic statement of policy if we are for preemption" of state privacy and predatory lending
laws, said Rep. Frank, D-Mass.

With debate over consumer privacy likely to occupy much of the House Financial Services and Senate Banking
committees' time next year, Rep. Frank said he will go into the debate from the position that financial institutions cannot
share customer data unless the customer gives explicit permission -- the so-called opt-in.

However, he would not say whether he would be willing to support banning states from enacting their own privacy laws
in exchange for getting tougher federal privacy regulations.

Rep. Frank said the "next step" in reforming corporate America is to address the role of analysts and initial public
offerings in investment banks.

"I want to put the IPO and analyst issue on the list of things we should study thoroughly," he said. "There may be cases
where we will want a national standard," he said.

He said he supports state regulators' efforts to reach a so-called global settlement with Wall Street firms but that
Congress may ultimately have to codify any agreement that is reached. However, he said needs to study the issue
further before recommending specifically what Congress should do.

He said the convergence of commercial and investment banking is not to blame for recent corporate improprieties and
that he has no intention of reopening the Gramm-Leach-Bliley Act that legalized the merging of financial sectors. "You
can't unscramble those eggs."

Also on his study list is whether deposit insurance coverage levels should be raised above $130,000, and whether banks
are engaging in the illegal activity of tying lending and investment products.

"I haven't seen (evidence of tying) yet, but it's something we should look at," he said.
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The American Banker, November 14, 2002

Rep. Spencer Bachus, the chief House sponsor of a stalled bill that would overhaul the deposit insurance system, said he
has no plans to dilute a controversial provision that would raise coverage levels above $100,000.

"I think it's an important component," said the Alabama Republican, who chairs the House Financial Services financial
institutions subcommittee. "My fellow Alabamian Dick Shelby and I have quite different opinions on that, but I think it
will all work out."

Rep. Bachus will have his work cut out for him. Sen. Shelby, who is in line to chair the Senate Banking Committee next
year, has said he opposes increasing coverage levels above the current $100,000. House Financial Services chairman
Michael G. Oxley said this fall he is willing to compromise on the coverage levels prescribed in the current House bill --
which will have to be reintroduced when the new Congress convenes next year.

Rep. Bachus said he is most committed to increasing insurance levels for Individual Retirement Accounts.

He also said he expects to tag-team with Sen. Shelby to oppose banks' extending their business powers to enter real
estate brokerage and management.

"Sen. Shelby and I are both concerned about the mixing of real estate and banking," Rep. Bachus said. "We both share
the opinion that shouldn't go forward, nor did we intend it in GLB."

Separately, Rep. Richard Baker -- the Louisiana Republican who chairs the powerful subcommittee with jurisdiction
over the markets, government sponsored enterprises, and insurance -- is planning to investigate the regulation of Fannie
Mae and Freddie Mac, probably starting with their accounting methods.

He said the debate on the government sponsored enterprises "may be a floor" on which broader debate over the
regulation of banks and insurance companies might be held.

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LOAD-DATE: November 13, 2002

LANGUAGE: ENGLISH

GRAPHIC: photo, Frank

Copyright 2002 American Banker, Inc.