Last year when these changes were in the works I had a discussion about them with one of the few Republican friends of labor who in my opinion has any credibility. The question I posed to him, is what happens to all of these independent "financial planners" who will now be faced with competition from commercial banks and if I read it correctly S&Ls too. Somehow I see the demise of Glass Steagall as putting a lot of people out of work or best case cutting into their earning potential in a significant way.
This should really hurt the less than college educated "financial planners" who will have a hard time getting employment with the banking and thrift industry. And my take is that the majority of "financial planners" are less than college graduates! Often with inflated credentials.
Meanwhile, I have been posting about the recent changes in Ohio corporate law. There is quite a bit in these recent changes relating to the organization of S&Ls in Ohio; the impact of these changes is unknown; although the outcome maybe a mini-S&L crisis in Ohio.
Tom Lehman
Peter Kilander wrote:
> [Clinton squeezes in another sell-out before end of term.]
>
> New York Times
> October 23, 1999
> NEWS ANALYSIS
>
> Big Gains by Gramm in Diluting Lending Act
>
> By RICHARD A. OPPEL Jr.
>
> Community-lending advocates and banking industry officials found one thing
> to agree on Friday about the rewrite of the Community Reinvestment Act: It
> is not going to improve lending in poor neighborhoods.
>
> After long negotiations on legislation to overhaul the nation's financial
> services laws, Senate Republicans and the Clinton Administration resolved
> their differences early Friday over whether to strengthen or weaken the law
> involving lending to minorities and others commonly denied credit.
>
> The law's chief critic, Senator Phil Gramm, Republican of Texas, appeared to
> get much of what he wanted. Gramm not only secured reductions in how often
> small banks would have to face compliance examinations, but he also won a
> provision requiring his ideological adversaries, the community advocacy
> groups, to disclose how much they receive from reinvestment agreements with
> banks.
>
> Gramm has said the groups use these agreements to "extort" money from banks
> by dropping objections to mergers or expansions in exchange for payments.
> Community groups say that the agreements are an important part of insuring
> better access to credit in poor areas and that fewer banks will agree to
> them if the details have to be disclosed.
>
> By comparison, a provision trumpeted by the Clinton Administration failed to
> impress many low-income-lending advocates. The Administration, which had
> threatened to veto any measure that weakened the community lending law,
> inserted language barring institutions from expanding or buying an insurer,
> brokerage firm or bank unless all their affiliated lending institutions have
> satisfactory ratings on fair lending. Clinton said the new provisions will
> "promote continued investment in America's communities."
>
> But critics pointed out that the deal includes no penalties for banks that
> fail to maintain satisfactory grades. Moreover, they said, the forces that
> have lobbied hardest for the bill are among the biggest lending institutions
> in the country, and they almost never receive unsatisfactory
> community-lending ratings.
>
> "In their desire to please the financial industry, the Administration has
> agreed to substantially reduce the impact of C.R.A.," said Chris Saffert, a
> legislative representative for the Association of Community Organizations
> for Reform Now. "Phil Gramm completely walked over the Administration. And
> for them to be saying this is a good bill is a poor reflection on their
> priorities."
>
> The deal struck on Friday also allows banks with less than $250 million in
> assets to undergo a community-lending compliance examination once every five
> years if their last exam resulted in an "outstanding" grade, and every four
> years if they last scored "satisfactory." Under current law, examinations
> are required every 18 months.
>
> Community groups expressed concern, saying that this change would allow many
> institutions to finesse the examination process by sloughing off
> community-reinvestment loans in most years, as long as they take them
> seriously in the period leading up to an examination.
>
> John Henneberger, director of the Texas Low Income Housing Information
> Service, said a study of 89 Texas banks that failed exams from 1990 to 1995
> found that 87 had less than $250 million in assets. But he said the study
> also showed that most of those quickly improved their lending practices
> after their bad ratings, demonstrating that vigilant oversight of small
> banks is effective.
>
> "Communities that rely exclusively on small banks to provide mortgage credit
> are having the same hard time as inner-city folks," Henneberger said. "The
> numbers are very close."
>
> Steve Scurlock, executive vice president of the Independent Bankers
> Association of Texas, said the changes would not hurt small-town lending.
> The study's findings are not surprising, he said, given that more than 90
> percent of Texas banks have less than $250 million in assets.
>
> "The overwhelming majority of community banks do a very credible job of
> serving their community," he said, "which has a direct relationship to the
> well-being of banks over the long term."