The Senate Committee on Banking, Housing and Urban Affairs today approved the Financial Services Modernization Act of 1999, which will make it easier for consumers to conduct their banking, securities and insurance business in one location.

Committee Chairman Phil Gramm, R-Texas, said he expects the bill to be considered in the full Senate after the Senate's Easter recess ends in early April.

"It has been clear for 25 years that we have needed a new structure for financial services that addresses the real needs of consumers and the industry," Gramm said. "The committee's action today is the first step in building a modern structure, and I'm going to work hard to pass the best bill possible."

As approved by the committee in an 11-9 vote, the bill will:

• Allow bank holding companies to participate in a wider array of financial activities, including insurance, securities underwriting and merchant banking.
• Allow national banks with $1 billion or less in assets to participate in a wider array of financial activities through operating subsidiaries. Such activities must be approved by the Comptroller of the Currency and will generally exclude real estate development and investment.
• Allow commercial companies that currently hold charters for savings and loan associations or had charter applications pending as of Feb. 28, 1999, to retain those charters.
• Allow community banks to join the Federal Home Loan Bank System.
• Allow financial institutions that have received three consecutive years of satisfactory examinations under the Community Reinvestment Act to receive a presumption that they are in compliance with CRA at the time of mergers, branch openings or other activities. Any one with substantial verifiable evidence that a financial institution was not in compliance will be allowed to present that evidence to the appropriate banking agency.

The Banking Committee approved six amendments to the 130-page markup draft of the bill, including one that will allow state insurance regulators to establish safeguards for the sale of insurance by banks. Such safeguards include a reminder to consumers that insurance products sold by banks are not covered by the Federal Deposit Insurance Corp. The amendment was sponsored by Sen. Richard Bryan, D-Nev.

Another amendment would exempt small banks with less than $100 million in assets from the requirements of the Community Reinvestment Act. The amendment was sponsored by Sen. Richard Shelby, R-Ala.