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Securities and Exchange Commission Chairman David Ruder says his agency will support legislation allowing banks into the securities business only if safeguards are included for the consumer.

Ruder, testifying this week before a House subcommittee on repeal of the Depression Era Glass-Steagall Act separating commercial from investment banking, said he supported compromise legislation adopted overwhelmingly by the Senate last month.The Senate bill, which would allow banks to engage in most securities activities through a separate, arms-length subsidiary under a bank holding company structure, includes provisions that place most bank securities activities under SEC jurisdiction.

Ruder told the House Telecommunications and Finance Subcommittee that the SEC would oppose a House version of the bill if it reduced the SEC jurisdiction afforded by the Senate bill or weakened firewalls between the bank and the securities subsidiary designed to protect the bank and its customers.

Many of the safeguards are intended to prevent conflicts of interest and include strict limitations on banks loans to its securities affiliate and limitations on bank purchase of securities underwritten by the affiliate.

Mostly, however, the SEC has been eager to obtain jurisdiction over the banks' securities activities rather than allow them to be regulated by the bank regulators such as the Federal Reserve and the Comptroller of the Currency.

"If Glass-Steagall is to be repealed, banks must be required to conduct their expanded and their current securities activities in separate entities subject to commission regulation, with certain limited exceptions," Ruder said.

The Glass-Steagall Act, passed in 1933, was designed to protect banks and their customers from the risks of the securities business, but in recent years, the barrier between investment and commercial banking has eroded.

The Senate bill, the result of a difficult compromise between the securities, banking and insurance industries, would allow banks gradual entry into most areas of securities underwriting and dealing.

It would call for a separate congressional vote in 1991 to determine whether banks should be allowed to underwrite stock, one of the riskiest securities activities.

Two House committees, the Energy Commerce Committee and the Banking Committee, are holding hearings on Glass-Steagall repeal, preparing to mark up their own bills later this year.