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

DATE: THURSDAY, March 3, 1994                   TAG: 9403030051
SECTION: BUSINESS                    PAGE: C-10   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

BANK REFORM FINDS LITTLE HELP IN SENATE

A proposal to streamline the federal bureaucracy regulating banks appears to have hit a roadblock in the Senate unless the Clinton administration makes major concessions.

In an appearance Wednesday before the Senate Banking Committee, the chief opponent of the administration's plan, Federal Reserve Chairman Alan Greenspan, gave little ground.

The administration is proposing that banking regulation be consolidated from four agencies into one new Federal Banking Commission, but Greenspan said that's too much power to give to one agency.

Many of the committee's Republicans and two of its Democrats, Sens. Christopher Dodd of Connecticut and Richard Shelby of Alabama, said they supported the Fed in what has become a bitter bureaucratic turf fight.

Greenspan said denying banks a choice of regulators "closes off a safety valve, inevitably leading to greater micro-management of banks" and less bank lending.

He said the Fed must continue to write rules for banks in order to successfully carry out its duties as overseer of monetary policy and interest rates.

Without hands-on regulation duties, the Fed's "essential knowledge base would atrophy . . . and the nation's central bank would soon resemble an ivory tower," Greenspan said.

Sen. Donald Riegle, D-Mich., the committee chairman, extracted a promise from Greenspan to meet with Treasury Secretary Lloyd Bentsen to attempt to work out a compromise in a week to 10 days.

"My sense is, nothing's going to happen this year. A deal may be attempted, but if it does get put on the table, I think it will be shot down," said Bert Ely, a financial institutions analyst in Alexandria, Va.

The administration's plan would create a five-member Federal Banking Commission. Two Treasury Department bureaus - the Office of the Comptroller of the Currency and the Office of Thrift Supervision - would be abolished.

And two independent agencies - the Federal Reserve Board and the Federal Deposit Insurance Corp. - would be stripped of their roles as overseers of state-chartered banks.

by CNB