Congress votes to loosen regulations

By BETH LUCAS
Collegian Staff Writer

Banks may be able to expand their range of business if a banking reform act pushed for since the George Bush administration is passed this year.

The Financial Service Act of 1999, which is closer than ever to being passed, would repeal some of the 1930 New Deal reforms and allow banks to create their own insurance, including health and car insurance, and provide stocks and bonds.

"This would provide consumers with a better choice in products and where they buy the products," said David Runkel, communications director for the U.S. House Banking Committee.

The insurance industry would not be concerned with the added competition as long as banks' insurance is separate from the banks' other operations and is regulated the same as all other insurance, said Chuck Fritzel, assistant vice president of government relations for the National Association of Independent Insurers.

In the 1930s, New Deal bank reforms restricted banks from practicing any form of financial service aside from holding and loaning money. These reforms were meant to protect banks from going out of business and consumers from losing their money, Runkel said.

Banks hold only 28 percent of all money saved in the United States, Runkel said. Banks, which generally are insured by the Federal Deposit Insurance Corp., are the only institutions that can insure saved money, he added.

The act would provide more convenient service as well as that security.

"The goal is for consumers to be able to go into a bank, put some money in savings, maybe some into stocks and to maybe buy some insurance, all in the same place," Runkel said.

The outcome of such a bill would affect every bank differently, depending upon its interests, said Dave Richards, president of Nittany Bank, 116 E. College Ave.

He disregards fears large banks and insurance firms would form partnerships, cutting out smaller banks from the market.

"More competition is always better for the consumer," he said.

If passed, the shift toward offering new services would be slow, he added. But it could open up various doors in the future, including the possibility of more complex work positions in banks.

"If I were a student, or anyone, I would really be looking at the opportunities this may create," he said.

• Banking's next wave