Federal Reserve Board Governor RobertHeller said the U.S. legal and regulatory framework of the U.S
financial system needs a complete overhaul so American banks
can be more competitive in international markets.
    "It has become abundantly clear that our financial system
must be overhauled to bring it up to the standard that will be
required if we are to remain the leading financial power of the
world in the coming years," Heller said in a speech prepared for
delivery to a financial services industry conference.
    Heller said a patchwork approach to changing the nation's
banking and financial services laws will not work.
    "Instead, a comprehensive overhaul of the entire financial
system is called for," he said.
    Heller said he was encouraged that Congress would take a
comprehensive look at reforming the nation's banking laws after
they enact legislation now pending that would recapitalize the
Federal Savings and Loan Insurance Corp and give federal
regulators more power to deal with failing banks.
    Heller said he liked the concept of the financial services
holding company, which would allow a bank to exist side by side
with other financial services companies. He said that would end
the debate on securities powers for banks.
    "The holding company may own both a securities house and a
bank, so that both services may be provided to the same
customer, subject to safeguards against conflicts of interest,"
he said.
    Such an institution be in a better position to compete in
the financial services markets around the globe, he said.
    Heller said he expects world trade to expand more rapidly
that domestic production and that traditional trade finance
should grow with it.
    "It may be time to dust off the old letters of credit and to
prepare for an increase in traditional export financing
opportunities," Heller said.
    But he warned that protectionist sentiments could "kill the
golden goose that is about to provide new profit opportunities
for international traders and bankers alike that will benefit
consumers by providing them with cheaper goods."
 Reuter
