Fed to Expand Banks’ Underwriting Powers

The push by the nation’s banks into stock and bond dealings is getting a big boost from the Federal Reserve Board. The Fed is expected today to let banks earn more revenues from securities underwriting, increasing the ceiling to 25% from the current 10%. The expansion comes amid numerous moves by federal regulators this year to let banks expand into new businesses after Congress failed again to pass a bank modernization bill. Directly affected by the Fed’s move will be 38 bank holding companies that were permitted to deal in stocks and bonds through separate affiliates. The Securities Industry Assn. argues that the new rule will make it easier for banks to buy securities firms while restrictions remain on who can own a commercial bank.