WASHINGTON -- Bankers hailed Monday's House-Senate agreement on interstate and community development bank legislation, describing it as evidence that Congress is trying to kick the regulation habit.

"The pendulum is swinging in the right direction, after swinging the wrong way for 10 years," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America.

Although the legislation is known primarily in terms of its two major components branching and community development banks - for many institutions the regulatory relief title of the bill is the most important section.

Edward L. Yingling, director of government relations for the American Bankers Association, said the bill stands in stark contrast to the years following the savings and loan bailout when "almost any idea that anybody had for a new regulation had a significant possibility of being enacted."

And the dividends will continue to roll in, he said.

"This bill says to regulators that they don't have to be afraid to be reasonable" in dealing with banks, he added.

An item of particular importance to small banks exempts well-run institutions with less than $250 million in assets from the annual examination cycle. Currently, only institutions with less than $100 million in assets qualify for the 18-month cycle.

The bill also eliminates the requirement that banks pay to publish their call reports in local newspapers and reduces the paperwork involved in complying with anti-money-laundering laws.

Mr. Yingling said the industry as a whole could save $40 million just from the new anti-money-laundering provisions.

Credit for Poorer Areas

On Capitol Hill, one staunch advocate of the interstate bill said the legislation would benefit economically depressed communities by increasing the pool of available credit.

"This is historic legislation, legislation that will bring the geography of banking into the 20th century," said Sen. Christopher J. Dodd, D-Conn. "The beauty of it is that it is good for both consumers and businesses."

Sen. Dodd introduced a version of the interstate bill in the Senate. And it was his decision to refrain from seeking amendments limiting bank insurance powers that made interstate legislation possible this year.

The IBAA's Mr. Guenther decried the interstate provisions as "special interest legislation for big banks," adding: "It has nothing in it for small banks."

But Joe Belew, president of the Consumer Bankers Association of America, disagreed.

"An awful lot of smaller banks will take advantage of interstate," he said. Among them are institutions located on a state border, and small bank holding companies formed by the merger of small banks in separate states.

"Being able to make deposits across state lines is a lot more important than some people think," Mr. Belew added.

The legislation still faces a few potential hurdles. Sen. Howard Metzenbaum, D-Ohio, and Sen. Phil Gramm, R-Tex. are both expected to raise procedural roadblocks. But most industry observers said they expect the legislation to sail through with little difficulty.

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