Two House Banking Committee Republicans are pushing to let nonfinancial firms own a limited amount of banking assets.
Reps. Bill McCollum of Florida and Richard Baker of Louisiana are arguing that the leading reform plan unfairly blocks commercial firms from acquiring banks.
While details are still sketchy, the two lawmakers describe their plan as a mirror image of the Clinton administration's plan to let banks invest in a limited "basket" of nonfinancial business.
"We want the committee to consider a broader approach than currently envisioned by Treasury," Rep. Baker said.
Details of the lawmakers' so-called "reverse basket" proposal include:
Commercial firms could buy a bank if its gross revenue does not exceed a still-undetermined percentage of the parent company's revenue.
Large banks, perhaps those with assets greater than $500 million, would be off limits to commercial firms.
Growth of banks owned by commercial firms could be limited.
If it attracts enough support, the plan will be offered as an amendment when the Banking Committee votes on financial modernization June 17. House Banking Committee Chairman Jim Leach is expected to make a draft of a compromise bill available to lawmakers today. A final draft is expected Friday.
Rep. Baker said his plan is aimed at generating thrift industry support for financial reform. Thrifts oppose the leading pieces of reform legislation because they all contain limits on cross-industry mergers. That would be a step backward for the industry because nonfinancial companies already may own a thrift.
Robert R. Davis, director of government relations for America's Community Bankers, called the plan "a noble effort" but said the two lawmakers aren't likely to change the thrift industry's position. "Our view is that limits on business activity are all inherently restrictive," he said.
Rep. McCollum has argued that the proposal would help small banks by making them more attractive acquisition targets.
But Kenneth A. Guenther, executive vice president of the Independent Bankers of America, called the plan a "very dangerous" step that would leave banking vulnerable to domination by conglomerates.
