It's called the financial modernization bill, CBS MarketWatch Correspondent Stacey Tisdale reports, and it's going to change the way average citizens do their banking. The measure would allow people to bank, buy insurance and trade stocks all with the same company.
"It's a historic step forward," says White House economic adviser Gene Sperling. "In that it's repealing a Depression-made piece of legislation that now is clearly out of date."
If signed into law, the bill would dismantle a 1933 law created in reaction to the 1929 stock market crash. At the time, the government decided that banks should not be allowed to go into other financial businesses because they defaulted on so many loans -- contributing to the Great Depression.
Now, the bill's promoters say these industries would be able to join forces, creating giant mega-corporations to offer consumers money-saving one-stop shopping for services.
According to Jim Leach, House Banking Committee, "You're going to have a streamlined financial system, the Treasurer estimates $15 billion dollars a year in annual consumer savings."
But consumer advocates like Ralph Nader simply don't like the new plan. "If you give all your financial business, insurance, securities, mortgage, savings to one company, it's going to have you by the neck, and it's going to be able to charge you whatever it wants," Nader says.
Nader warns there is no system of checks and balances in this bill to stop these new financial supermarkets from raising fees. He says as competition shrinks while companies merge, consumers will have fewer and fewer choices.
"It's going to massively concentrate resources, insurance, banking and securities into a few giant conglomerates," he cautions.
Another concern is that the banking industry lobbied heavily for the bill, and critics say executives had business' -- not consumers' -- best interests in mind. As a group, banks, insurance and securities companies spent more than $300 million in 1997 and 1998 on political donations and lobbying.
Sperling says, "Our belief is that this bill will give consumers more choices, lower cost, even more competition and efficiency."
| Part of the new deal is already drawing fire from consumer groups.|
The worry surrounds the amount of power a company holds when it knows your most personal health secrets -- while at the same time, approving your home loan or managing your stock portfolio.
"If you have prostate cancer, if you have AIDS, if you have breast cancer, if you have depression," explains Rep. Ed Markey, D-Mass., "a bank doesn't have a right to take your medical records and give them to 1,000 brokers in town and let them pour through your records."
But the banking industry insists the legislation has actually added new protections. For example, consumers can now say "no" to a bank wishing to sell their information to a tele-marketer, something banks can currently do without permission. What's more, proponents say making these mergers possible will make everyone's life easier.
According to Ed Yingling of the American Bankers Association, "What's positive for the consumer about this bill is choice. The consumer will have the choice of doing one-stop shopping which can bring greater convenience."
All the same, many consumers agree it's a moot point: Keeping secrets in the information age is practically impossible anyway.
The banking industry insists it will work hard to help protect consumer privacy; and in spite of the efforts of the consumer rights groups to stop them, the bankers will get a chance to make good on their word. Next week, Congress takes a final vote on the bill, and then it's off to the White House for the president to sign into law.