The Securities and Exchange Commission has again delayed implementation of a plan that would give the commission oversight over brokerage services offered by banks-a move some banks say would force them out of business, Bloomberg News reported.
Hearing the objections of banks, regulators and the Federal Reserve, the SEC delayed until March 31 the rule that exempts banks offering brokerage services from SEC oversight, Bloomberg reported.
Banks have complained, saying the rule would be prohibitively expensive since each individual account would have to be scrutinized.
"The proposal would severely limit our ability to continue serving our custodial clients" such as pension plans and investment advisers, Sarah A. Miller, general counsel of the American Banking Association's securities association, told Bloomberg. "Many banks would be out of business."
This is the second time the SEC has delayed implementation of provisions of the 1999 Gramm-Leach-Bliley Act, which calls for some banks that offer securities services to be overseen by the SEC, Bloomberg reported.
Detractors include the Fed, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, who claim the SEC's regulation of bank brokerage services would impact the ability of the banks to offer additional products and services.
Last month, the House Financial Services Committee, joined the detractors, writing a letter to the SEC criticizing the proposal and encouraging the commission to collaborate with banking regulators on a new plan, Bloomberg reported. The committee asked the SEC and banking regulators to enter into a "joint rulemaking" on the issue.
"The proposed rules are inconsistent in many respects with Congressional intent and will create a burdensome and unwarranted regulatory regime," John H. Huffstutler, an associate general counsel for Bank of America Corp., based in Charlotte, wrote in a letter to the SEC, which was reported by Bloomberg.