Sen. Terry Sanford, D-N.C., recently introduced legislation that would allow national banks to underwrite municipal revenue bonds. Sen. Sanford said the measure is needed to help improve the economy and provide greater flexibility to municipal governments.
"Raising funds for local public works projects is extremely difficult, and thus many ideas generated by local people for local improvements are considered wishful thinking," Sen. Sanford said in introducing the bill last month. "This is simply unacceptable. Our infrastructure is decaying."
According to Sen. Sanford, his bill would ease pressures on small towns, particularly those that may not be attractive to large underwriters.
"A local bank would in all likelihood be more interested in and more likely to underwrite small community projects, and local citizens would more likely buy these bonds because they are typically safe, community-minded investments," he said.
In the 1960s, the Office of the Comptroller of the Currency allowed national banks to underwrite revenue bonds.
But a federal appeals court in 1968 said the practice was inconsistent with the 1933 Glass-Steagall Act, which allows commercial banks to underwrite general obligation bonds but generally bars other underwriting.
A number of legislative attempts in recent years to allow banks to underwrite municipal revenue bonds and other securities have won Senate approval, but have been stymied by the House of Representatives.
The fate of Sen. Sanford's proposal is uncertain because bank powers legislation does not typically fare well in election years.
Moreover, the measure's co-sponsors, Sen. Jake Garn, R-Utah, and Sen. Alan J. Dixon, D-Ill., will not return to the Senate next year. Sen. Garn is retiring, and Sen. Dixon lost his primary election.
Will political or economic considerations spell the demise of a new law?
The President is threatening to veto a voter registration bill that passed Congress Tuesday on the grounds that it infringes upon states' rights.
The bill would require states to allow people to register as voters by mail or when they apply for driver's and marriage licenses, or for welfare and unemployment benefits.
But the bill provides "no funds for this expensive new federal mandate on the states," the Office of Management and Budget said in a statement Tuesday that appears to borrow from governors' rhetoric.
State officials have frequently said the OMB had no such concerns when it proposed eliminating funding for various federally mandated projects, such as water pollution control or urban development.
The OMB added in its statement on the voter bill that it would recommend a veto because it would "rewrite the election laws of virtually all states" and "prevent states from implementing procedures that are responsive to local conditions."
Democrats charge that the real reason President Bush and congressional Republicans don't like the bill is because it makes voter registration easier for potential Democratic voters, such as welfare recipients and the unemployed.
The administration supported a version of the bill, defeated along party lines, that would have provided $25 million of incentive grants to the states to adopt voluntary changes in potentially discriminatory registration laws.
