WASHINGTON - Rep. Jim Leach must surrender his chairmanship of the House Banking Committee in two months - and he could not be happier.
The Iowa Republican will be forced out by a pledge his party made in 1995 when it captured control of the House: Members may hold committee chairs for no more than six years.
"I am looking forward to the end," the lawmaker said in an interview Thursday. "And I mean this literally: I think I am the only committee chairman that thinks it's a good rule. It's healthy to have a little revitalization, a little turnover."
Still, when Congress returns from its summer recess after Labor Day, roughly five weeks of legislative business will remain, and Rep. Leach vowed to make the most of them.
His top priority is getting legislation enacted that would protect virtually all swaps contracts entered into by banks and other financial institutions from new federal regulation, and would provide legal certainty that swaps will remain enforceable.
Rep. Leach also plans to fight for a pet provision in the bill that would let financial institutions terminate derivatives and others contracts with a failed institution and offset their debts with the insolvent party's obligations to them. The purpose is to prevent a large failure from having a domino effect on the whole financial system.
The House and Senate Banking committees have passed the legislation, but the versions differ dramatically on the extent of the protections for swaps. Senate Banking chairman Phil Gramm also has complaints about unrelated provisions. Rep. Leach said he cannot be sure that the House version - which provides the broadest protection for banking products from federal red tape - will prevail.
"The banking community has an enormous vested interest, and the public has an enormous vested interest, in the way [the committee] did it. We have the most pro-competitive way of doing it. I am for giving the benefit of the doubt to competition."
With a few weeks left in the session and the partisan atmosphere of an election year, any legislation faces long odds, and Rep. Leach declared two bills virtually dead: anti-money-laundering and consumer bankruptcy reforms.
House Banking overwhelmingly passed a bill on June 8 that would give the Treasury secretary authority to identify countries or overseas financial institutions with weak policies against money laundering and to target suspect types of international transactions. Depending on the situation, banks could face increased reporting requirements. They could also be forced to reveal the owners of, or to stop offering, suspect types of accounts. But Sen. Gramm has criticized the bill.
"I personally think we have a good bill," Rep. Leach said. "But I don't give that high odds. Sen. Gramm has come out strongly against it. That makes it more difficult. The administration is strongly behind it. We will just have to wait and see."
Likewise, he said, President Clinton's repeated veto threats mean bankruptcy reform is doomed.
"It's very unlikely that becomes law," he said. "I have seen all these ups and downs of optimism and pessimism, but I have never believed it was likely to become law, because I don't think the administration is going to sign it. Everyone thinks, 'It's such common sense, they'll pass it.' I believe this is a political year, and that there is slim chance they will sign it."
Rep. Leach said he is disappointed that House Banking's medical privacy bill - which would prevent insurance companies from transferring personally identifiable medical records to banks, affiliates, or third parties without customer approval - is a likely casualty of industry opposition. He warns financial companies that they may be acting against their self interest if state legislatures take the bill's failure as a cue to act.
"It's a really common sense bill," he said. "Without it, you are going to have huge battles at the state level, with all sorts of incompatible state laws. It's going to make it very difficult for the financial sector."
Rep. Leach's reelection prospects look good, but he declined to discuss plans for next year. He is next in line to become chairman of the House International Relations Committee, if Republicans keep a majority. However, he could face a stiff challenge from Rep. Doug Bereuter, R-Neb. Rep. Leach is expected to remain a member of the Banking Committee.
He acknowledged the Gramm-Leach-Bliley Act of 1999 as one of the panel's greatest accomplishments under his leadership. Regulators have done a good job of implementing the law, he said.
The only serious controversy has been the Federal Reserve Board's proposal to impose a 50% capital charge on merchant banking. Though he has opinions on the issue, Rep. Leach said he will exit silently and leave the matter to regulators. "I am making no comment," he said.