House Banking Committee Chairman Jim Leach spent the week trying to broker a deal with bank and insurance industry groups, in the hope of finally freeing up his financial modernization bill.
The Iowa Republican's latest offer would remove a moratorium on the comptroller's ability to grant new insurance powers to banks. It also would allow banks and insurance firms to be owned by the same holding company and would rely on the standard set in the Supreme Court's Barnett ruling to prevent states from interfering with bank insurance sales.
To placate the insurance industry, Rep. Leach would delay bank and insurance company affiliation for three years after the bill's enactment.
So far, neither side has blinked, frustrating Rep. Leach's top banking aide, who on Thursday accused the Comptroller's Office of interfering with the negotiations.
Joseph Seidel, the banking panel's chief counsel, said the Comptroller's Office is waging a turf battle by again attacking insurance provisions attached to Rep. Leach's Glass-Steagall/regulatory relief bill.
"The OCC may prefer that Congress pass a bill that makes it the exclusive federal regulator of banking," said Mr. Seidel in May 1 memo to Rep. Leach released Thursday.
Mr. Seidel's angry comments were prompted by OCC Chief Counsel Julie Williams' second analysis of the proposed insurance restrictions. In the April 29 memo, Ms. Williams said Rep. Leach uses "deliberate ambiguity" so bank and insurance industry rivals can interpret the plan in their favor.
Ms. Williams also argued that some states will still be able to restrict bank insurance sales, blocking the agency from granting new insurance powers to national banks under Rep. Leach's new proposal.
Mr. Seidel disagreed with her interpretation. The latest proposal, he said, simply requires the Comptroller to consider states' views when granting new powers. "This requirement does not deprive the OCC of any of its existing authority," he said.
Rep. Leach has repeatedly complained that Comptroller Eugene Ludwig is trying to kill his bill because it makes the Federal Reserve Board the primary regulator of national banks that conduct new activities allowed by the legislation, such as securities underwriting.
