When asked to sum up his 1999 agenda, House Banking Committee Chairman Jim Leach responded with uncharacteristic pithiness: "Steady as she goes."
A better description might be: "Financial modernization or bust."
The Iowa Republican said the next two years will be his last at the committee's helm. Dominated by financial services reform, his short priority list contains no surprises and essentially reprises unfinished business from last session.
Rep. Leach said in an interview that he supports a regulatory relief bill that would let banks pay interest on business checking accounts and earn interest on idle balances held at Federal Reserve banks. He is also reviving a privacy bill that would make it illegal for "information brokers" to trick banks into divulging confidential customer information.
The banking panel will hold more oversight hearings on hedge funds, preparations for the year-2000 computer glitch, and the International Monetary Fund. Committee members also will devote significant time to nonbanking issues such as housing and natural disaster insurance.
For now, Rep. Leach is leaving Community Reinvestment Act issues, money laundering, credit union membership, and other thorny matters to his subcommittee chairmen.
While playing down suggestions that he is under pressure to enact financial reform as the legacy of his chairmanship, Rep. Leach has moved quickly to sustain last fall's momentum. He introduced compromise legislation Jan. 6, the first day of the new Congress, and he has scheduled three days of hearings in early February. He has vowed to send reform legislation to the House floor by the end of March.
Rep. Leach displayed mild enthusiasm. Renowned as a master of detail, he referred to a list prepared by staff members of his other priorities-after discussing reform for the bulk of the interview. Lobbyists said Rep. Leach's bare-bones agenda underscores his single-minded focus.
"Last Congress, it took them every minute of two years to almost get modernization passed," said Annie Hall, government relations director for Bank One Corp. "I wouldn't be surprised if this is priority 1, 2, and 3."
The reform bill "is so huge," said Edward L. Yingling, chief lobbyist for the American Bankers Association. "Other than regulatory relief, I don't know if there is a lot on the horizon."
Rep. Leach said he supports the Republican leadership's 1994 decision to limit committee chairmen to six-year terms, and he said he will not seek an exemption. Most observers agreed that the term limit will not weaken him.
"He is off to such a strong start and is such an active leader, he will be controlling the committee for most if not all of the Congress," said Karen Shaw Petrou, president of the ISD/Shaw Inc. consulting firm in Washington.
Several lobbyists-and Rep. Leach himself-argued that his mission may be easier. The House approved financial reform for the first time ever last year, by a single vote; House Speaker J. Dennis Hastert has restored power to committee chairmen; and representatives feel pressure to enact legislation to demonstrate they have accomplished more than impeaching the president.
"Instead of having to whip recalcitrant and reluctant colleagues into line, the incentive to produce is there already," said Paul A. Schosberg, president of America's Community Bankers.
Yet the banking committee chairman will have to maneuver around partisan fallout from the trial of President Clinton and the usual turf fight with the House Commerce Committee.
Rep. Leach talked tough, warning that he would rather have legislation stall than compromise his principles. "It's not just doing a bank modernization bill that's important," he said. "If it's done the wrong way, I will definitely not support it."
For instance, he said, he would "strenuously" object to letting banks and commercial businesses own each other. He acknowledged that Senate Banking Committee Chairman Phil Gramm and Rep. John J. LaFalce, the ranking Democrat on the House Banking Committee, have proposed otherwise.
"To re-raise the issue at this time would be a major mistake," Rep. Leach said. "Very serious actors continue to advocate it, although, interestingly, the private-sector agitation for it has declined precipitously" in the past two years.
Yet he cast the failure to enact reform in dire terms. "The consequences are that America's competitive position in the world will weaken" and overseas rivals will outgun U.S. financial services firms.
On the vexing CRA question, Rep. Leach said his bill offers a middle ground between last year's House version and Sen. Gramm's position.
The Texas Republican blocked the bill in the Senate last year because he opposed its community reinvestment-related provisions, which would have required a bank holding company to have a "satisfactory" or better CRA rating in order to merge with a securities or insurance firm. Under the House version, federal regulators could have busted up a merged entity if the rating fell below satisfactory.
Rep. Leach has proposed scaling back the requirement so that banks would only need a satisfactory or better CRA rating before a merger. "What we put in was a compromise in (Sen. Gramm's) direction," he said.
Rep. Leach said he still holds out hope for compromise on the other major roadblock to reform: the Fed/Treasury Department turf battle over where new bank powers should be located.
Possible compromises include letting small banks conduct broader activities in direct operating subsidiaries while requiring larger banks to use holding company units.
