Editorials
Saturday, November 6, 1999Banking reform bill
entails some risksCONGRESS has approved a bill that overturns 66 years of banking law to permit marriages of financial institutions. The measure, which President Clinton is expected to sign, will supplant the 1933 Glass-Steagall Act, which restricts relations between banks, insurance companies and securities firms. The financial services industry had been lobbying for such changes for more than two decades.The issue: Congress has passed a banking reform bill to permit the merger of financial institutions.
Allowing one-stop shopping for checking accounts, annuities, mutual funds and stocks could mean savings in the billions of dollars for consumers, who now spend $350 billion a year in fees and commissions.
The measure is also expected to strengthen and give more flexibility to U.S. financial services firms in competition with foreign institutions.
Sen. Charles Schumer, D-N.Y., said, "The future of America's dominance as the center of the financial world is at stake." He contended that the bill will preserve millions of high-paying jobs.
Senate Banking Chairman Phil Gramm of Texas said Congress' action would "bring logic back to the financial sector." He noted that innovative companies have already found ways around the law to enter each others' businesses and the legislation is merely catching up with the marketplace.
But Rep. David Obey, D-Wis., called the bill "consumer fraud masquerading as finance reform."
Citigroup Inc., Merrill Lynch & Co., Aetna Inc. and dozens of other firms have lobbied for years for repeal of the Glass-Steagall Act and the 1956 Bank Holding Company Act. The three industries contributed almost $200 million to political campaigns over the past decade.
Bigger is often better and that may be true in financial services, particularly in the new global financial environment. But the law removes safeguards that were enacted as a result of abuses that contributed to the Great Depression of the 1930s.
Despite all that has been learned from that disaster, the possibility that financial institutions will encounter strains of similar magnitude in the future cannot be dismissed. With the restraints of Glass-Steagall removed, will the banks avoid the excesses that led to the collapse of 1929?
Another source of concern is the possibility that personal information will be shared by the various parts of the new conglomerates. The bill's provisions protecting the privacy of information are viewed by some consumer advocates as inadequate. However, the measure gives supremacy to state laws that provide consumers with stronger privacy protection.
Reform of the banking system and relief from the restraints enacted in another era are clearly necessary. American financial institutions must be able to compete on equal terms with their foreign rivals.
But concentrating economic power in the hands of fewer people brings risks as well as advantages. How this plays out will be of vital concern to millions of Americans. Congress should be ready to enact changes in the law as indicated by experience.
Tougher gun controls
Although Hawaii gun control laws are among the strictest in the nation, this week's multiple murders of Xerox employees have generated interest in tightening the laws still further. State legislators say they expect public pressure for action on the issue.
One proposed approach is to require periodic relicensing of gun owners, to deal with the situation in the Xerox case. The accused killer, Byran Uyesugi, had at least 18 firearms registered in his name. He reportedly was denied a gun permit in 1994 after his arrest in 1993 for investigation of criminal property damage related to an argument with co-workers.
Senate Judiciary Co-Chairman Matt Matsunaga agreed that the gun laws should be strengthened and that enforcement of existing laws may need improvement.
House Republican leader Barbara Marumoto said she would support legislation requiring police to check for past gun registrations by anyone who has a current registration rejected.
House Judiciary co-chairman Eric Hamakawa said legislators may consider allowing police to review records for the purpose of learning whether a registered owner or applicant has a history of mental illness. However, Hamakawa added that the Legislature needs to step back and review existing laws before enacting new ones.
Big Island resident Pegi Scully, whose 28-year-old son was killed when a gunman opened fire in a San Francisco law firm in July 1993, said lawmakers should look at the possibility of requiring gun owners to renew their registration. She pointed out that people aren't given driver's licenses for the rest of their lives, and said the same should be true for gun owners.
It is impossible for the law to take every possible scenario involving firearms into account. But checking for records of mental illness and periodic relicensing are ideas that might make a difference in cases such as this. Legislators should examine their feasibility.
Xerox Massacre
Published by Liberty Newspapers Limited PartnershipRupert E. Phillips, CEO
John M. Flanagan, Editor & Publisher
David Shapiro, Managing Editor
Diane Yukihiro Chang, Senior Editor & Editorial Page Editor
Frank Bridgewater & Michael Rovner, Assistant Managing Editors
A.A. Smyser, Contributing Editor
