Senate Banking Committee Chairman Alfonse M. D'Amato said Thursday that he will hold a hearing June 17 on financial reform legislation.
Though supporters had expected a more bullish statement, the New York Republican gave no hint whether his committee or the full Senate will vote on the bill this year.
"Financial services legislation to revise legal constraints that are no longer appropriate to our financial institutions is needed," Sen. D'Amato and Sen. Paul S. Sarbanes, the committee's top Democrat, said in a written statement. "However, the specific direction and framework of financial reform has proven over the years to be extremely divisive."
These unrevealing remarks compounded the mixed signals being sent on the bill's fate. Besides doubts about the Senate's intentions are questions of whether community bankers' fervent opposition is wilting.
House Banking Committee Chairman Jim Leach-who helped steer the bill to a one-vote victory in the House on May 13-immediately offered an upbeat response to the senators' announcement.
"The prospects of bank modernization legislation are always dicey, but the D'Amato-Sarbanes commitment to review the bill this summer increases the possibility of bipartisan legislation emerging this Congress," the Iowa Republican said.
But opponents insisted that the Senate has neither the time nor the inclination to approve such a controversial bill by adjournment this October while budget talks, credit union legislation, and other crucial issues loom.
"The statement doesn't indicate that there is a strong push to move the bill this year," said Edward L. Yingling, chief lobbyist for the American Bankers Association. "Everything we are hearing from senators on the committee and in the leadership-Republican and Democrat-is that there is no time to move the bill this year."
After a meeting with Sen. D'Amato here Wednesday, the chief executives of three large insurance and securities companies had expected the Banking Committee boss to officially throw his weight behind the legislation.
Sanford I. Weill of Travelers Group, David H. Komanski of Merrill Lynch & Co., and Phillip J. Purcell of Morgan Stanley, Dean Witter & Co. pressed Sen. D'Amato to move forward. They made similar pitches to Majority Leader Trent Lott and Sen. Christopher J. Dodd, D-Conn., in separate meetings.
Though the executives applauded the senators' statement as a "major step" toward enactment of a reform law this year, its ambivalence disappointed them. "Everybody was expecting more," a lobbyist pushing the bill said.
Possible explanations varied. Some observers speculated that lobbyists were trying to hype its chances. Others countered that Sen. D'Amato may be playing election-year politics by privately assuring supporters while saying little publicly to antagonize opponents.
Meanwhile, Rep. Leach said that his victorious amendment preventing bank holding companies from owning nonfinancial businesses is weakening community bankers' opposition to the legislation. Other sources said heavy lobbying by Federal Reserve Board Chairman Alan Greenspan was starting to sway small bankers.
After meeting with Independent Bankers Association of America members this week, Rep. Leach said: "This body is now dramatically divided."
Though IBAA officials praised the prohibition on commercial activities, they continued to demand tougher curbs on unitary thrift holding companies and fewer limits on bank sales of insurance.
"It has gotten to be a closer call because of the Leach amendment, but IBAA maintains its position of opposition," said Kenneth A. Guenther, the IBAA's executive vice president.