The House Commerce Committee begins hearings on Glass-Steagall legislation next week, and by the time the panel finishes its work, the hearing room could look like a combat zone.
The main battle is between the banking and insurance industries, although securities firms and diversified financial services companies will likely see some action as well.
Hanging in the balance is the fate of the Glass-Steagall Act, a 62-year- old law that addresses securities and banking and has not a thing to do with insurance. But for better or worse, it is the insurance issue more than any other that will determine whether the Depression-era law lives to see a new year.
A number of ideas are being tossed around right now as talks progress among legislative aides and lobbyists, but two broad themes appear to have taken center stage as points of debate.
First is the affiliations approach, also known as Plan A. This approach would permit banking concerns to own insurance companies through a holding company structure. Thus, a bank could affiliate with, but not actually own, an insurance company.
A degree of enforced separation between banks and insurance companies would answer concerns among insurance agents who don't want banks selling insurance in their lobbies. However, the proponents of Plan A also have something to offer banks, who do want insurance sold in their lobbies.
As a sweetener, Plan A advocates would leave it up to the states to decide whether closer affiliations could be permitted. (This approach could also turn out to be a sweetener for the insurance agents, if the bill is drafted to give states broad power to limit bank activities.)
The alternative is Plan B - an approach being attributed to the American Council of Life Insurance and its president, former South Carolina Gov. Carroll A. Campbell.
Plan B would strip the Comptroller of the Currency of his power to authorize new insurance powers under the "incidental to banking" doctrine. Bankers would go ballistic, but the idea is very much in tune with the thinking of both House Banking Committee Chairman Jim Leach and House Commerce chief Thomas J. Bliley. Lately, Rep. Leach has been most vocal in denouncing the Comptroller of the Currency on insurance powers.
Under this approach, banks already involved in selling or underwriting insurance would be "grandfathered," or allowed to continue their current business. And insurance powers would remain available through the states.
Other sweeteners might be given to banks. Annuities, for example, could be explicitly authorized, settling cases that are now pending before the Supreme Court.
Lurking in the background is a third option that is only just beginning to get some attention. If the insurance talks break down, some on Capitol Hill are talking about attaching Plan B - limits on the Comptroller of the Currency - to a regulatory relief bill that banks desperately want.
Glass-Steagall would then be moved as a "clean bill," unencumbered by extraneous issues. However, it would be moved in tandem with the regulatory relief-insurance bill.
Regulatory relief is scheduled for a subcommittee vote June 14, and the House Banking Committee is expected to take it up the following week - the same week that Commerce is required to finish work on Glass-Steagall.
"The two bills could go to the floor, if not simultaneously, then very close," said one Hill aide close to the process.
If that happens, then the industry would have to choose. Would it swallow hard on insurance powers in order to get Glass-Steagall repeal and regulatory relief? Or would it oppose the entire package? More important, does the industry's stance matter?
Right now, the insurance issue is being dealt with primarily at the staff level. The hard decisions, though, will be made by Rep. Leach, Rep. Bliley, and House Speaker Newt Gingrich.
And if they decide to link regulatory relief and insurance, that bill could be hard to stop.