WASHINGTON - Mounting a late-hour offensive, 36 bank chief executives have appealed to Speaker Newt Gingrich to strip objectionable provisions from a legislative package that would repeal the Glass-Steagall Act and ease the industry's regulatory burden.
An Oct. 11 letter signed by the bankers, who included Roger L. Fitzsimonds, chairman and CEO of Firstar Corp., and Keycorp CEO Robert W. Gillespie, criticizes the measure because it blocks new insurance powers for banks and restricts their ability to sell securities. In the letter to all House members, the CEOs called the current proposal "anticonsumer, protectionist legislation" that would "turn the clock backwards on true bank modernization."
In an interview Thursday, Mr. Gillespie said the signers supported Glass-Steagall repeal and were eager for less burdensome regulations, but they found the bill's constraints unacceptable.
"We just wanted to make sure the people responsible for this legislation understand we are not ambivalent and we would fight hard for changes," he said.
Mr. Gillespie said lawmakers may think bankers are "complacent" about the insurance limits since the Independent Bankers Association of America announced its support this week for the bill despite reservations over the insurance provisions.
Mr. Fitzsimonds said in a separate interview that the legislation to repeal the Glass-Steagall bill had become a major disappointment to bankers. "There's no question everybody in our group is looking for finanical modernization, but this bill takes a positive thing and makes it cumbersome," Mr. Fitzsimonds said.
Though the CEOs are voicing their concerns rather late in the legislative process, they hope to sway Mr. Gingrich and other House leaders before the bill is completed and brought to a floor vote.
House Banking Chairman Jim Leach, R-Iowa, was negotiating with House Commerce Chairman Thomas Bliley Jr., R-Va., Thursday to iron out their differences. Rep. Leach said he hoped to bring the bill to the House floor Oct. 17.
Some banking sources, however, said House leaders would put off the vote until mid-November because the securities provisions remained unresolved.
The bankers are angered by a provision in the package that would prohibit the Comptroller of the Currency from granting new bank insurance powers for five years. They also object to the elimination of an amendment that would have allowed banks to affiliate with insurance companies in most states. Finally, they are worried that the talks between Mr. Leach and Mr. Bliley will result in rules forcing them to establish separate subsidiaries to sell securities rather than simply selling directly from the bank.
"This is still a living document," Mr. Fitzsimonds said. "We wanted to say in writing, 'please don't do that.'"
It's unclear what impact the letter will have.
The proposed insurance moratorium and the elimination of the so-called Baker amendment, which would have allowed bank and insurance company affiliation, were dictated by House leaders, including Speaker Gingrich, so there may be little room for debate. As for the structure of securities sales, House Banking staffers said negotiations with Rep. Bliley would likely result in a compromise bankers could accept.
Whatever happens in the House, the industry still has an opportunity to change the legislation when it reaches the Senate.
"Nothing is final in something like this," said American Bankers Association chief lobbyist Edward L. Yingling. "We still have the Senate to go and there are lots of places to go to change the dynamic."
Though signees of the letter head money-center and large regional banks, some of the most ardent backers of Glass-Steagall repeal were absent from the list, including NationsBank, Fleet Financial, J.P. Morgan, and Citicorp.