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Reform the banking laws


MERELY a decade late, Washington now appears ready to begin the huge task of reforming the financial system. With proposals being drafted by the Treasury Department, the Bush administration is preparing to revamp banking laws from top to bottom -- and Congress may be ready to join the effort.

Clearly the system is in great need of reform. The fundamental laws that regulate commercial banks were developed during the Great Depression of the 1930s. As the nation gears up for the 21st century, new laws are needed to keep up with changing technology, new competitive pressures and growing international commerce.

Still, it's not surprising that both the White House and Congress have been reluctant to meddle with a system that grew out of the hard lessons learned in the 1920s and early 1930s. Older Americans still have nightmarish memories of bank runs and lost savings. Tampering with the deposit-insurance system is not something to be done lightly.

But the need for reform is now overwhelming. While a complete (( overhaul may sound radical, the real danger lies in taking halfway steps that leave the system with one foot in the 1930s and the other in the year 2000.

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