Gingrich & Co. Tie Insurance To Regulatory Relief for Banks

WASHINGTON - House Republican leaders have tentatively agreed to amend regulatory relief legislation with a provision barring the Office of the Comptroller of the Currency from authorizing new bank insurance powers.

Speaker Newt Gingrich, Majority Leader Dick Armey, and the chairmen of three key committees also agreed this week to link Glass-Steagall repeal legislation to the regulatory relief bill.

Bank representatives reacted angrily to the news, threatening to oppose both regulatory relief - the industry's top priority - and the Glass- Steagall measure if the Comptroller's office amendment is attached.

"We have severe problems with this," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America.

Mr. Guenther said his group would now give strong consideration to opposing the Glass-Steagall repeal bill. Although the IBAA has never supported repeal of the 1933 law, it has remained neutral on this year's bill, which is sponsored by an ally, House Banking Committee Chairman Jim Leach.

Joe Belew, president of the Consumer Bankers Association, said the restrictions on the OCC "are a very big deal" for his member banks.

"Ten years ago, nobody could have predicted the advent of annuities," he said. "But they have become very important. Nobody knows what the next new product will be, and we don't want to be immediately foreclosed from offering it."

Also signing off on the leadership agreement were Rep. Leach, Commerce Committee Chairman Thomas J. Bliley, and Rules Committee Chairman Gerald B. Solomon.

The leaders have agreed to:

* Put a "permanent moratorium" on the OCC's power to authorize new bank insurance powers. Existing powers would be protected.

* Move the Glass-Steagall bill through the Commerce Committee without amendment.

* Either merge the Glass-Steagall and regulatory relief bills into a single package or move them "in tandem but separately on the House floor." No other insurance amendments would be permitted on the floor.

However, Rep. Bliley said Rep. Solomon has agreed to permit a floor amendment that would require banks to move securities activities into separately capitalized affiliates - a step most banks would oppose.

Edward L. Yingling, top lobbyist for the American Bankers Association, said he believes "the situation is still very much in flux." It is not entirely clear that the leadership plan would pass either in the banking panel or on the House floor, he added.

However, Mr. Yingling said he doubts the regulatory relief bill would pass the House in the face of strong industry opposition.

A subcommittee of the Commerce Committee approved the House Banking Committee's version of Glass-Steagall repeal Tuesday without amendment. The parent committee must still act on it.

While no change in the measure was voted on by the subcommittee, Rep. John D. Dingell, the panel's ranking Democrat, showcased an amendment that will likely be the one offered on the floor under Rep. Bliley's agreement with Rep. Solomon.

The amendment, which Rep. Dingell offered and then withdrew, would force banks to move many existing activities, such as the underwriting of asset- backed securities, into separate affiliates regulated by the Securities and Exchange Commission.

Rep. Bliley said he would "support the concept fully" on the House floor, adding: "This is not a partisan issue - this is a question of fairness."

While a securities industry lobbyist said the Dingell amendment is a step in the direction of true functional regulation, he added that he was "still unhappy with the bill."

However, Rep. Leach said in a brief interview that he would "oppose (the Dingell amendment) in its currently understood framework."

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