Signaling a victory for banks, Senate Majority Leader Trent Lott has vowed that insurance restrictions would not be included in legislation to shore up the Savings Association Insurance Fund.
Sen. Lott's comments Tuesday night pleased banking lobbyists who have been locked in a fierce battle with the insurance industry about two proposals that would roll back bank insurance powers.
One would force all insurance agents, including those employed by national banks, to obtain state licenses. The other would prohibit federal deposit insurance for the so-called retirement CD.
"He said the thrift fund rescue was not the place for insurance provisions, and we are very encouraged by that," said McKinley W. Deaver, executive director of the Mississippi Bankers Association.
Sen. Lott, a Mississippi Republican, met with the association's representatives Tuesday and pledged to "do everything he could" to fight the restrictions, Mr. Deaver said.
"It's a relief to hear him say that," said Edward L. Yingling, chief lobbyist of the American Bankers Association.
Sen. Lott and House Majority Leader Richard Armey continued talks with the banking committee chairmen Wednesday to complete the banking legislative package.
It is expected that the plan will be rolled into a defense spending bill and voted on before Congress adjourns this weekend.
Besides the thrift fund rescue, the package is expected to give banks regulatory relief and protect lenders from borrowers' environmental cleanup costs.
Despite Sen. Lott's comforting words, bank lobbyists aren't dropping their guard.
House Rules Committee Chairman Gerald Solomon vowed Wednesday to keep fighting for restrictions on bank insurance powers. His committee, which sets rules for floor debate on most legislation, will vote on the banking package before the House weighs in.
Supporters of the insurance restrictions are hoping Rep. Solomon can reverse the tide.
"We understand reality, but that doesn't mean were going to stop working," said Ken Vest, a spokesman for the American Council of Life Insurance. "State licensing is fundamental to us, and we're going to keep at it until the last dog dies."
Rep. Solomon has little chance of forcing insurance restrictions into the bill over Sen. Lott's wishes but may have enough power to block the regulatory relief provisions, said Richard F. Hohlt, a lobbyist backing the thrift fund rescue.
"It would be a real test of Solomon's manhood," Mr. Hohlt said, "but if he makes the issue too controversial, he could get Republican leaders to drop regulatory relief."
While the main provisions of the thrift fund rescue have been ironed out, some lawmakers were still pushing for important changes.
In a letter Monday to Ways and Means Committee Chairman Bill Archer, Rep. Edward Royce, R-Calif., asked for a provision that would make the special assessment paid by thrifts tax-deductible during the year it is paid. Without this provision, thrifts would be forced to amortize the deduction over five years.
