WASHINGTON - Only banks with satisfactory Community Reinvestment Act ratings would be permitted to affiliate with securities firms under an amendment approved Tuesday by the House Banking Committee.
The amendment, sponsored by Rep. Kweisi Mfume, D-Md., was approved on a voice vote as the committee began work on Chairman Jim Leach's bill to repeal the Glass-Steagall Act.
"This amendment does not expand paperwork, and ensures that an insured depository institution has achieved a satisfactory record of meeting its community's needs" before getting into securities underwriting, Rep. Mfume said.
The panel worked through 41 amendments with unusual speed, and it appeared late in the day that it could wrap up its work Tuesday. If so, the legislation would have cleared its first major hurdle.
However, the bill has a long road ahead, starting with the House Commerce Committee, which is likely to be less friendly to the banking industry's interests. The bill also must win approval on the House floor and travel a similar path through the Senate.
As of late afternoon, the committee still had not taken up a proposal to let banks merge with insurance companies. The measure, sponsored by Rep. Richard Baker, R-La., could prove the most ticklish issue facing the Glass- Steagall reform campaign.
"The amendment can only go forward if it can be worked out between the insurance agents and the banks," said Edward L. Yingling, chief lobbyist for the American Bankers Association. "At this point there has been no ongoing discussion between the two groups."