The final report of a vice presidential task force on banking reform was released yesterday, almost 10 months after the major conclusions were reached.
In its efforts to simplify the regulatory maze that has evolved in the past half century, the panel of government regulators proposed creation of a federal banking agency to regulate all national banks and their bank holding companies. However, the largest bank holding companies and those banks with substantial foreign activities would continue to be under the supervision of the Federal Reserve System.
Under the proposal in a report called "Blueprint for Reform," the Federal Deposit Insurance Corp. would give up most regulatory powers to concentrate on insuring deposits. The regulatory and insurance system for qualified savings institutions would remain the same.
More than four dozen recommendations were approved by the panel and by President Reagan. They will now be forwarded to Congress.
The task force was formed several years ago as part of the administration's effort to cut government waste and inefficiency and to try to deal with inequities that have crept into the system with chaotic growth of the financial services industry. Yet, regulatory reform as an issue may have been overtaken by events.
On Capitol Hill, regulatory reform will be just one of a growing list of issues waiting for the banking committees when they return. Perhaps the most urgent -- and most controversial -- of these is resolution of the "nonbank bank" issue. Exploitation of a legal loophole in the Bank Holding Company Act by industry giants is rapidly changing the character of banking, creating a nationwide system. Whether Congress can reverse the trend remains to be seen.
Inextricably connected to closing the loophole -- at least in the plans of Senate Banking Committee Chairman Jake Garn (R-Utah) -- is the issue of whether banks may deal in securities. Congress failed to resolve its differences over this in the final days of the last session and, therefore, may take considerable time on this increasingly controversial matter in the next session.
Still another issue is insurance reforms being promoted by the FDIC and the Federal Savings and Loan Insurance Corp. Plagued by failures and serious drains on their trust funds, those agencies will try to get legislators to change the 50-year-old system of uniform premiums for financial institutions to variable premiums based on risk. This is also controversial, since it could create a two-tier system of sound and less-sound institutions.