WASHINGTON — The Federal Reserve Board on Thursday made it easier for banks to compete with brokerages by letting bank holding companies offer credit guarantees to customers of their securities affiliates and knocking down other barriers between the banking and securities businesses.
The Fed's actions, announced as proposed rules in January, eliminate most of the remaining restrictions that complicate banking companies' management of their securities affiliates.
Large banks such as J.P. Morgan & Co., Bankers Trust New York Corp., Fleet Financial Group, First Union Corp. and BankAmerica Corp. have welcomed the proposal. That is because the changes will improve the chances bank securities subsidiaries can match or beat underwriting terms offered by traditional investment banks such as Goldman Sachs & Co., which have criticized the plan.
"This is part of the ongoing relaxation of the Fed guidelines which is incrementally helping our efforts," said Mark Mahoney, the head of investment banking at First Union. "All this is very positive for expanding the activities of" banks' securities affiliates.