SECURITIES GROUP FAVORS NEW BANK POWER FREEZE
The Securities Industry Association
endorsed legislation expected to come before the Senate Banking
Committee tomorrow imposing a moratorium on new powers for
commercial banks.
    Robert Gerard, managing director of Morgan Stanley and Co,
told reporters his group, which mainly represents investment
banking firms, supported committee members who want the Federal
Reserve Board to postpone action on applications by three bank
holding companies seeking new powers.
    "The Fed ought to hold those applications in abeyance
pending congressional review," Gerard said.     
    The legislation before the committee would recapitalize a
federal desposit insurance fund for savings and loan
associations and prohibit new nonbank banks.
    Gerard said the securities association had no position on
nonbank banks.
    The association wants Congress to undertake a comprehensive
study before changing the Glass-Steagall Act, which separates
commercial and investment banking activities, Gerard said.
Until the study is completed, the Fed should not act on the
applications by Citicorp, J.P. Morgan and Co. and Bankers Trust
New York Corp to underwrite and deal in securities, he said.   
    The study was likely to show substantial benefits from
continuing the separation of commercial and investment banking,
he said.
    Gerard said the group believes a proposal by House Speaker
Jim Wright for a tax on securities was unjustified and would
hurt individual investors and beneficiaries of pension funds
that invest in securities.
    "It may reduce the volume of activity, but the tax is a tax
on the saver and investor," Gerard said.
    In addition, a U.S. tax would drive business from the
United States to other countries, he said.             
 Reuter
