WASHINGTON - House Republican leaders announced plans Thursday to link Glass-Steagall repeal with regulatory reform legislation and bring the combined bill to the floor for a vote this fall.
However, the bill would also limit bank insurance powers, stifle the Office of the Comptroller of the Currency, and force banks to move some securities activities to separate units.
In addition, it now appears that any changes to the Community Reinvestment Act will be modest.
The legislative package might even be broadened to include a $12 billion rescue of the thrift insurance fund. "That's a possibility - no more than that," House Banking Committee Chairman Jim Leach said in an interview Thursday. "It depends on a whole lot of factors, including a lot of tax issues being resolved to the satisfaction of the Ways and Means Committee."
Senate Banking Committee Chairman Alfonse M. D'Amato, while mum publicly, has told industry lobbyists that he, too, wants to tackle these issues collectively.
Although the House plans to finish this bill this year, the Senate may not get around to enacting anything more than funding for the Savings Association Insurance Fund until next year, according to industry lobbyists.
Regardless of the timing, industry support appears to be waning.
"They're tying an awful lot of antibanking baggage into an ever weakening 'reg relief' bill," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America.
"At this time, we are not on board."
"The accumulation of this legislation looks to me negative from the standpoint of the future of the banking industry," said Paul A. Schosberg, president of America's Community Bankers. "As things stand now, I don't view this as particularly progressive or forward-thinking."
Edward L. Yingling, executive director of government relations for the American Bankers Association, said his organization is waiting to see the details before taking a position.
"We don't have the specifics on the critical issues to know what we think about it," he said. "But we are deeply concerned about the concept of the moratorium on the Comptroller being included in any package."
In deciding to combine Glass-Steagall and regulatory relief, House leaders agreed to freeze the Comptroller of the Currency's power to authorize new insurance powers for banks for a number of years, possibly five.
In another blow to banks, House leaders agreed to drop an amendment that would have allowed banks to affiliate with insurance companies in most states. The ABA had solidly supported the so-called Baker amendment.
Finally Thursday, House leaders agreed the bill would contain a compromise on bank securities powers. Apparently, Rep. Leach and House Commerce Committee Chairman Thomas J. Bliley, R-Va., are still working on the deal.
But at the heart of the debate is the question of which currently eligible bank securities activities would have to be moved into a holding company affiliate. Also on the table is how much jurisdiction over banks will be given to the Securities and Exchange Commission.
The Glass-Steagall repeal bill approved by the House Banking Committee would allow some bank securities activities to remain in the bank, or in a "separately identifiable department."
New activities such as underwriting municipal revenue bonds may have to be conducted in holding company affiliates.
Separately, the House panel's financial institutions subcommittee voted 15-1 late Wednesday to bail out the thrift insurance fund and merge the bank and thrift industries. The full committee attached a similar bill to the budget reconciliation package it approved Tuesday.
- Olaf de Senerpont Domis contributed to this article.
