Bush Administration Backs Narrow Bank Bill in House
WASHINGTON -- The Bush administration threw its support Wednesday behind a narrowly focused banking bill in the House, pinning fading hopes for broader legislation on the Senate.
The House is expected to vote today on its measure, which would recapitalize the deposit insurance fund and override a law permitting banks chartered in Delaware to underwrite insurance. The likelihood of passage seemed good Wednesday.
Lobbying the Senate
The White House is now urging the Senate to approve a bill that would also let banks branch across state lines. It then would have a chance of salvaging interstate branching when the two measures go to a conference committee.
But despite intensive lobbying by Treasury Secretary Nicholas Brady, the prospects remained slim for a broader bill's emerging from the Senate.
With Congress set to adjourn next week, Senate Banking Committee Chairman Donald Riegle, D-Mich., was under pressure to accept a scaled-back measure.
"The thing really just has fallen apart," said Sen. Connie Mack, R-Fla. "I think we're going to end up with a fairly narrow bill."
The House bill would let the Federal Deposit Insurance Corp. borrow $30 billion to cover losses from bank failures as well as borrow $40 billion for working capital, which would be repaid once seized assets were sold.
Quick Bank Closings
The measure would require regulators to move quickly to close troubled banks and to use the "least costly method" of handling failures. It would also give the Federal Reserve greater control over foreign-owned banks.
In addition, the bill would bar state-chartered banks from underwriting insurance. This would be a big blow to major New York banks, including Citicorp and Chase Manhattan Corp., that have been hoping to sell and underwrite insurance nationwide via subsidiaries chartered in Delaware.
The administration said that it was endorsing the House measure "to move forward the legislative process on banking legislation."
The statement said the administration "will continue to strongly support changes before enactment of this legislation, particularly the addition of provisions authorizing interstate branching, which would provide real banking reform."
Rep. Tom R. Carper, D-Del., said the bill has a "very good chance" of passing if no attempts are made to amend it on the House floor.
Sen. Riegle was struggling to persuade his committee to drop amendments to the bill or at least agree to limit debate.
Tuesday night, Senate Majority Leader George Mitchell, D-Maine, pulled the banking bill from the floor and urged Sen. Riegle and Sen. Jake Garn, R-Utah, the panel's ranking Republican, to see whether agreements could be reached on some of the nearly 40 amendments still pending. In a full day of debate that ended at 9:30 p.m., the Senate had voted on only two amendments.
ABA Wins One
In a significant victory for the American Bankers Association, the Senate voted to strip the bill of a provision that would have required banks to cash government checks and offer low-cost accounts to the poor.
Many observers said the lengthy debate was part of a deliberate effort by Republicans and some Democrats to slow the bill's progress.
Two Republicans, Sen. Jesse Helms of North Carolina and Sen. Phil Gramm of Texas, were said to have told Sen. Robert Dole, the Republican leader, that they were prepared to block efforts to limit debate on the bill. Such an agreement would require unanimous consent.