The American Bankers Association came out against the financial reform bill Wednesday, calling it "anti-competitive and discriminatory."
Scheduled for a vote in the House Tuesday, the bill "would undermine the national banking system," ABA president William T. McConnell told House Republican Conference Chairman John A. Boehner in a March 25 letter.
Rep. Boehner, the Ohio Republican leading the congressional task force responsible for getting a financial reform bill passed, was undaunted.
"We have heard from banks across America who support this legislation," he said in a statement, "and many of them see opportunity for all in these reforms. I know we will have converts along the way, and we still hope to convert the members of the ABA as the process continues."
Rep. Boehner also released a list of 28 organizations that support the legislation. It included Banc One Corp. and NationsBank Corp., among banking companies, and financial services firms such as Travelers Group, Merrill Lynch & Co., and American Express Co.
Another supporter, the American Insurance Association, predicted opposition from the banking industry would not be enough to stop the bill.
"The measure is widely and enthusiastically supported by insurers, insurance agents, the securities industry, and several large banks," said David Pratt, the insurance group's vice president for federal affairs.
But the ABA has strong allies in the opposition fight, including the Treasury Department, Chase Manhattan Corp., Citicorp, Bankers Roundtable, the thrift industry, and community bankers.
That should ensure a "tough battle" in the House, said Edward L. Yingling, ABA's chief lobbyist. But even if the bill passes next week, he asked, "Who is going to push this through the Senate with this kind of opposition? It has a very limited chance of ever seeing the light of day in the Senate."
In his letter, Mr. McConnell said the ABA objects to limits on insurance sales by national banks and curbs on the legal advantages federal regulators have to override state insurance laws. Giving securities regulators more power over banking products is another problem, he said.
Mr. McConnell also complained that the requirement to offer special accounts for low-income customers "will inevitably lead to onerous and unworkable regulations."
The ABA fears Republican leaders will drop the provisions weakening the thrift charter in order to bring that industry on board. But Paul A. Schosberg, president of America's Community Bankers, said the thrift industry group would still oppose the legislation. "The bill has many significant flaws beyond the thrift section," he said.
House Republican leaders plan to take the bill to the floor next week before a two-week congressional recess begins April 2. It must first clear the Rules Committee, which tentatively expects to hold a hearing next Monday or Tuesday.
Rep. Boehner said he planned to hold a task force meeting late Wednesday. Federal Reserve Board Chairman Alan Greenspan, who supports the bill, was the invited speaker.
Still undecided is whether to link financial reform with another controversial bill that would redefine credit union membership limits.