As legislation reforming the nation's financial laws and revamping credit union membership rules moved to the House floor Tuesday, banking groups remained united in opposition despite efforts by Republican leaders to divide them.

"I have every confidence we will stick together," said Edward L. Yingling, the American Bankers Association's chief lobbyist.

The House was scheduled to vote late Tuesday on legislation that would permit banking, insurance, and securities companies to merge as well as let credit unions serve an unlimited number of small companies. Debate over a supplemental spending bill delayed consideration of the financial measure to late afternoon.

The House Rules Committee late Monday tried to improve the bill's chances by linking it with the credit union legislation and reversing plans to weaken the thrift charter or merge the deposit insurance funds.

House Republican leaders solidly back the legislation, and their allies include the Federal Reserve Board, credit unions, the insurance industry, and securities firms. Banks, thrifts, many House Democrats, and the Clinton administration oppose the measure.

Banking industry leaders said the Rules Committee's about-face on the thrift charter was an attempt to split the opposition.

"If that is the motive, it ain't working," said Paul A. Schosberg, president of America's Community Bankers, the thrift trade group. "We still cannot support the bill."

House Republicans dropped most of the provisions that would have curbed thrift charter powers.

New unitary thrift holding companies would still be banned. But the Rules Committee voted to grandfather any charter in existence or requested by March 31, a six-month extension from an earlier version of the bill. In another change that would enhance the value of these franchises, unitary thrift holding companies could be sold and retain their grandfathered protections.

But Mr. Schosberg said the thrift trade group still objects to the moratorium on new unitary thrifts and restrictions on national bank powers.

The Rules Committee agreed to let lawmakers propose five amendments on the House floor Tuesday. Two appear directed at assuaging community bankers. One, proposed by House Banking Committee Chairman Jim Leach, would prevent financial holding companies from owning nonfinancial businesses. Another, sponsored by Rep. Spencer T. Bachus 3d, R-Ala., would direct regulators to loosen Community Reinvestment Act requirements on banks with less than $250 million of assets.

"We appreciate what they are doing, but this in no way changes our fundamental opposition to the combined bills on the House floor," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America.

Countering Rep. Leach's amendment, the House will also vote on a change proposed by Rep. Marge Roukema, R-N.J. It would let financial holding companies earn 15% of their domestic revenues from nonfinancial businesses. As written, the legislation would permit these companies to earn 5% of worldwide revenues from nonfinancial activities.

The Democrats in opposition did not want the credit union legislation linked to financial reform.

"It is comparable to buying the credit unions a ticket on the Titanic," Rep. John J. LaFalce of New York, the ranking Democrat on House Banking, and two other committee Democrats wrote in a letter to fellow party members.

Their letter also objected to limits on bank operating subsidiary powers and lambasted Rep. Bachus' proposed amendment as "a frontal assault on CRA that we should not tolerate."

Echoing bankers, these Democrats urged colleagues to vote against the rule, or procedure, adopted by the Rules Committee that linked the two bills. That rule will be voted on separately before debate on the bill itself.

Bankers said they expect some Republicans to break ranks with party leaders and vote against the rule.

Fissures in the Republican Party were exposed at the Rules Committee meeting when three Republicans-Reps. Bill McCollum of Florida, Richard H. Baker of Louisiana, and David T. Dreier of California-circulated a letter opposing the financial reform bill as a regulatory burden on financial services companies and damaging to the competitiveness of national banks.

"There is a possibility if Democrats hold discipline and the Republicans can't, the rule could be defeated," Mr. Yingling said. "We are asking people to vote against the rule. That is our primary strategy at this point."

Rep. Dreier-the Rules panel's vice chairman, who presided over the meeting because Chairman Gerald Solomon's return from an overseas business trip was delayed-said in an interview that if the bill is defeated he would push a scaled-down version of financial reform that he has touted since last fall.

House Republican leaders suffered another setback when Rep. John D. Dingell, D-Mich., the ranking minority member on the Commerce Committee, withdrew his support Monday.

He had declared his backing for the bill over the weekend after he thought Republican leaders had agreed to add two of his consumer protection amendments.

"Regrettably, there seems to have been some misunderstanding of what we were proposing to each other," he said at the Rules Committee meeting.

However, a pending amendment would give the Securities and Exchange Commission stronger enforcement powers and add other consumer protections.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.