It also sets new capital standards for the 12 FHLBanks-an effective floor of 4 percent total capital. Return to Top Securities Establishes a new framework for regulating bank and bank holding company securities brokerage and underwriting activities and repeals provisions of the Glass-Steagall Act. Banks may now freely affiliate with securities companies. Non-bank affiliates within holding companies can engage in merchant banking activities. Financial subs of national banks can engage in securities underwriting, and may be permitted to engage in merchant banking in five years.
National banks can also underwrite municipal revenue bonds.
Community bank brokerage and trust activities are largely unaffected. The Fed and SEC now have equal status to determine if future bank products with securities-like aspects may continue to be offered in the bank or must be offered in a securities affiliate. The bill also imposes an affirmative obligation on banks to respect their customers' privacy interests. Community banks can thus continue such sales practices without being subject to the opt-out provisions contained elsewhere in the legislation. ABA's extensive work on the privacy provisions included major efforts to ensure that community banks were protected from undue burdens.