Securities firms, unlike commercial banks, have
strong objections to the regulators' final version of their interim
rule for merchant banking, issued January 10. Twenty days later
wrote to the regulators that
the final rule falls far short of providing the "two-way street"
envisaged by Gramm-Leach-Bliley to allow investment bankers into
Instead, the letter to the
said, "These rules will deter securities firms from
becoming financial holding companies and will limit affiliations
between securities firms and banking companies." SIA said safety
and soundness could be addressed with "rules that are far less
restrictive and complicated than what has been adopted."
The brokerage industry trade group urged the Fed
and the Bush Treasury to take another look at the final rule in the
light of the intentions of GLBA. A Fed spokesman said he had no
comment on that request.
But the Fed official did scotch a rumor that ran
around Washington last week, that maybe the regulators would delay
the merchant banking final rule for 60 days in deference to a Bush
White House memorandum asking that no regulations go to the Federal
Register and take effect during the next two months.