High-ranking Senate and House Republicans said Tuesday that they doubt Congress will adopt a comprehensive financial reform bill this year.
Congress will be distracted by the fall elections and a daunting list of domestic and international issues, Senate Majority Leader Trent Lott told the Council of Insurance Agents and Brokers. He cited the standoff with Iraq, Internal Revenue Service reform, the budget battle, campaign finance reform, the tobacco settlement, and transportation funding.
"Some of the issues you are interested in may be hard to get done this year because this is a short year and it is a political year," the Mississippi Republican said.
Sen. Lott put the ball in the court of the House, which last year got competing versions of financial reform from its Banking and Commerce committees. Unless the full House passes a bill, the Senate will not take up the matter, he warned.
House Majority Whip Thomas D. DeLay, however, did not even list financial reform when he presented to the conference his list of legislative priorities for the coming year.
In response to a reporter's question after his speech, the Texas Republican said disputes over which products constitute insurance and whether federal regulators should override state insurance regulators are likely to stymie any reform bill.
"As long as we have that hang-up, I think it is going to be very difficult to get a bill to the floor, much less pass it on the floor of the House," Rep. DeLay said.
"If we can come to some sort of agreement with the insurance industry, then we will have a bill and we will push it as fast as we can."
Rep. DeLay added that House leaders are putting "a lot of pressure" on the committee chairmen to reach a compromise before May.
Speaking earlier at the conference, Senate Banking Committee Chairman Alfonse M. D'Amato said the political "ingredients" do not exist to pass legislation in 1998 that would allow banks, insurance companies, and securities firms to merge.
The New York Republican, who said he supports financial reform, blamed the impasse on opposition by banks.
"It appears quite clear to me that the banking industry simply does not want any bill," Sen. D'Amato said. "I don't see any legislation coming."
Sen. D'Amato said banks appear satisfied by regulatory benefits granted by Comptroller of the Currency Eugene A. Ludwig, who has been widening bank powers without congressional approval.
Speakers on a morning panel suggested possible compromises on insurance matters.
For instance, the American Insurance Association could agree to the definition of insurance and banking products already in the House Commerce version, said David J. Pratt, senior vice president of federal affairs. Insurers have tended to favor a definition offered by the House Banking Committee.
Panelists from the banking and insurance industries also suggested creating a federal regulatory system for insurance to complement the existing state system.
Most of the differences between the banking and insurance industries are more political than substantive, said Gary E. Hughes, chief counsel of securities and banking for the American Council of Life Insurance. "I don't think we are that far apart."
Yet "our outlook right now is not terribly optimistic," Mr. Hughes said.
James T. McIntyre, Washington counsel for the Association of Banks in Insurance, disagreed. "The differences are fairly substantive," he said.
