Democrats Accuse the GOP Of Inviting Reform Bill Veto

Closing ranks on financial reform, Treasury Secretary Lawrence H. Summers and key Democrats on Tuesday accused Republicans of partisan politics that could force a presidential veto of the legislation.

At issue was a decision last week by House and Senate Republican leaders to have their committee chairmen draft a compromise bill that Democrats would have a chance to amend later.

That course "could lead to partisanship and division and reduce the prospects of achieving the goal we all share," Mr. Summers said in a luncheon speech to the Women in Housing and Finance. "The right kind of bill can only be produced on a bipartisan basis."

Mr. Summers reiterated President Clinton's vow to veto the legislation -- which would remove the remaining barriers between the banking, insurance, and securities industries -- unless congressional negotiators meet the administration's four principal demands. They are: broad powers for bank operating subsidiaries, preservation of the Community Reinvestment Act, adequate consumer privacy protections, and a ban on mergers between unitary thrifts and nonfinancial firms.

Echoing the Treasury chief, the ranking Democrats on the Senate and House Banking committees said at a National Association of Federal Credit Unions conference here that they had been optimistic about the prospects of enactment this year.

"Those hopes got dashed considerably last week, when the Republican leadership came into the conference and said that the three committee chairmen only were going to put this legislation together," Sen. Paul S. Sarbanes of Maryland said.

The chairmen of the House Banking, Senate Banking, and House Commerce committees have said they would produce their own bill by Friday. Democrats said Tuesday that they were skeptical of Republican promises to consult them.

"These three wise men are going to put together a package and then lay it out on the table and give you a limited period of time to try to change it," Sen. Sarbanes said.

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