
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, February 6, 1991                   TAG: 9102060423
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A1   EDITION: METRO 
SOURCE: Los Angeles Times
DATELINE: WASHINGTON                                LENGTH: Medium

BUSH SUGGESTS BANK REFORM

The Bush administration proposed Tuesday the most drastic overhaul of financial laws since the Great Depression, calling for banks to have complete freedom to move across state lines and to enter fully into the business of marketing insurance and securities.

The plan aimed at reviving the ailing banking industry also calls for limiting government protection of deposits for an individual to $200,000 in each bank. After five years, a more stringent ceiling would be adopted, restricting an individual's protection to $200,000 total - $100,000 in savings and $100,000 in retirement accounts.

Currently, although every account is insured for a maximum of $100,000, there are no limits on the number of insured accounts.

The president's plan would shatter a longstanding separation of banking and commerce, and permit big companies to own banks as part of an effort to bring badly needed new capital to the financial world.

"The laws that govern financial services should deal with the real world in which banks and other financial institutions operate," said Secretary of Treasury Nicholas Brady.

The proposed reforms would require action by Congress, where the road to legislative success is long and uncertain.

"The administration makes a mistake in proposing new and risky activities for banks before the supervisory and insurance reforms are in place and working," said House Banking Committee chairman Henry Gonzalez, D-Texas.

Regulators under the Treasury plan would attempt to cut back the use of the "too-big-to-fail" doctrine, under which all depositors at large institutions - even those with individual accounts of more than $100,000 - are safeguarded in the event of failure.

Michael Smith, spokesman for Sovran Bank, said his company has long endorsed the idea of banking reform.

Based on initial news reports about the administration proposals, he said, Sovran officials "are very encouraged by what we see here."

A long time has passed since banks were allowed to expand their powers, Smith said, while non-bank competitors "are able to move into our area."

Although Smith has yet to review the specific proposals, he said bankers have "looked eagerly for this kind of legislation."

Joseph Ward, spokesman for Signet Bank, said new banking legislation is needed. He said Signet would cooperate in carrying out whatever reforms are enacted.

Staff Writer Mag Poff contributed information for this story.

by CNB