BANKING & FINANCE - Aug. 1, 1996

Fed Proposes Letting Banks Expand Securities Dealing: The plan would allow banks to substantially expand their securities dealing and underwriting businesses. The Federal Reserve Board is seeking public comment on a plan to raise to 25% from 10% the ratio of revenue that banks can derive from their Wall Street affiliates. It also proposed loosening other rules to separate securities activities from the commercial bank. At issue are revisions of Depression-era restrictions contained in the Glass-Steagall Act aimed at reducing the risk to banks by limiting their involvement in Wall Street deals. The Fed proposal was warmly greeted by banks but got a cool reception on Wall Street. If approved, it could further propel banks with a large securities business, such as J.P. Morgan & Co., into the industry’s upper rankings.