WASHINGTON -- A measure intended to open markets in countries that. discriminate against U.S. banks may get a second chance during this Congress.
The National Treatment in Banking Act of 1994, introduced last month by Rep. Charles Schumer, D-N.Y., and co-sponsored by Rep. Jim Leach, R-Iowa, is a scaled-back version of the Fair Trade in Financial Services bill that stalled during the community banking bill conference.
The House Banking Committee has scheduled a Sept. 13 vote on the bill, which would authorize the federal government to retaliate against foreign countries that treat U.S. banks unfairly.
However, since the bill's impact is limited to the banking industry, it does not set the stage for "cross-sectoral" retaliation. Some large banks had feared that earlier versions of the fair trade bill might prompt Japan and other countries to retaliate against U.S. banks if the U.S. took action against Japanese securities firms.
"We're for this kind of legislation as long as there is not cross-sector retaliation," said Edward L. Yingling, chief lobbyist for the American Bankers Association.
The bill builds on a 1988 law requiring the Treasury Department to identify countries that deny U.S. financial institutions fair competitive opportunities.
Under the Schumer bill, the secretary of the Treasury would identify countries that deny national treatment to U.S. banks, Banking regulators would have to take the Treasury's assessment into consideration when deciding whether to approve foreign banks' applications to enter the U.S. market.
U.S. banks "should be allowed to compete fairly in open foreign markets, in the same way that foreign banks and financial institutions can enter the large and lucrative U.S. market," said Rep. Schumer.
Fair Trade in Financial Services enjoyed broad support but got caught up in a jurisdictional dispute between the House Banking Committee and two other panels, including the powerful Ways and Means Committee.
"Ways and Means is a strong protector of the Office of Trade Representatives," Mr. Yingling said. "Once you start peeling off parts of trade law, you may end up undermining their authority. That was what killed it"
Rep. Schumer narrowed the new measure's focus from encompassing financial institutions in general down to just banks.
House Banking Committee sources said Rep. Schumer acted to avoid sharing jurisdiction for the measure with Ways and Means.