House Banking Committee Chairman Jim Leach accused thrift industry executives Monday of breaking a promise to support legislation that would eliminate the thrift charter.
"We are in desperate need of interest groups that keep their word," Rep. Leach told a meeting of the Association of Financial Services Holding Companies here.
The Iowa Republican said 1996 laws to expand thrift lending powers, equalize bank and thrift deposit insurance premiums, and reduce the tax burden on thrifts converting to banks were enacted to gain thrift industry support for legislation that would merge the charters.
"These groups have understood that the trade-off in all of this is charter consolidation," Rep. Leach told the holding company group. "There is no industry group that has done as well in Congress as the S&L industry ... and no industry group that has asked for more."
At a conference in New York, America's Community Bankers president Paul A. Schosberg responded that thrifts had never agreed to support legislation that would abolish the advantages of the thrift charter.
"There should be no diminution in the quality, scope, or competitiveness of existing charters," Mr. Schosberg said.
The financial modernization bill pending in the House would eliminate the thrift charter and force existing thrifts to become commercial banks two years after enactment. Existing unitary thrift holding companies would be frozen in place. Rep. Leach spoke to a group of executives from unitary thrift holding companies.
Rep. Leach argued that because nonbanking companies would no longer be able to charter a thrift under the bill, firms that already owned one would have an advantage.
"I have never been completely certain that the parties here understand their own vested interests," Rep. Leach said. "How is it in the vested interest of any institution that is grandfathered to allow others to have the same powers?"
Patrick Forte, president of the holding company trade group, argued that grandfathering unitary thrift holding companies would brand them as "lepers" and "would create a small universe that cannot be expanded."
