Banks Fight Moratorium On New Securities Powers
Dingell Seeks Ban Under Glass-Steagall Act
WASHINGTON -- Bank lobbyists launched an all-out effort Thursday to block Rep. John D. Dingell, the chairman of the House Energy and Commerce Committee, from placing a moratorium on bank securities activities.
"The moratorium has become a real threat," said an alarmed Edward L. Yingling, director of government relations for the American Bankers Association.
With the House leadership weighing the proposal seriously, he said, industry lobbyists spent the day trying to explain how emotionally charged the issue is for bankers. A seven-month moratorium included in a 1987 banking bill was the subject of a fierce lobbying campaign.
Letter of the Law
The moratorium, which apparently would bar the Federal Reserve from authorizing new securities powers for banks under Section 20 of the Glass-Steagall Act, emerged as a major stumbling block to a consensus package on the banking bill.
As a result, some observers believed House Speaker Thomas S. Foley, D-Wash., would conclude that the only bill that can pass is a narrow measure that provides money for the Bank Insurance Fund and some regulatory reforms, such as early closure of troubled institutions.
Rep. Foley "wants to call the game -- no wins, no losses, a tie for everyone," said Richard Hohlt, a lobbyist.
House Republican and Democratic leaders appeared in agreement Thursday afternoon on a package that would include a recapitalization of the bank fund, interstate branching authority, and limits on bank insurance powers.
Markey Joins Dingell
Rep. Dingell, D-Mich., and one of his Energy and Commerce subcommittee chairmen, Rep. Edward J. Markey, D-Mass., were said to be insisting that the moratorium be included in the bill.
Without support from their committee, the bill could run into problems with Democrats, who control the House. Republicans would likely abandon the measure if Mr. Dingell is accommodated.
"The Dingell moratorium is a killer," said Rep. Newt Gingrich, R-Ga., the House Republican whip. "We are hoping the Speaker will decide to send the bill to the floor without it."
While Democratic congressional sources predicted that a moratorium could be passed in the House, it would probably run into trouble in the Senate and face a presidential veto threat.
Curb on Insurance
Rep. Gingrich asserted that a broad consensus in the House is behind an amendment sponsored by Rep. James A. Hayes, D-La., that would prevent banks from using Delaware and small towns as launching pads for marketing insurance nationwide. The Hayes amendment would also bar banks from selling title insurance.
Despite the opposition to the Dingell moratorium, the banking industry remained divided Thursday over its approach to the reform bill. The Independent Bankers Association of America, which represents community banks, was pushing for a narrow bill and warned that any broad bill would include "negative" provisions on securities and insurance.
Others continued to hold out hope for an interstate branching provision. Joseph Belew, president of the Consumer Bankers Association, said his members are divided: Some favor a narrow bill and others, including BankAmerica Corp. and NCNB Corp., want to keep pressing for branching authority.
Interstate branching "translates directly into capital" through cost savings and consolidation, Mr. Belew said.
As a result, he said, "We are going to [tell lawmakers] that interstate is great, but there's no need to add insurance to it. Whether that position is tenable, I don't know."
The House leadership Thursday afternoon was trying to determine what kind of package might pass the House. Rules Committee Chairman Joe Moakley, D-Mass., said there was "about a 30% chance" that his panel would take up the package Thursday evening to decide what measures to send to the floor.
Such action could make a floor vote possible today, though a number of lawmakers said it would almost certainly wait until Tuesday.