WASHINGTON - The House Commerce Committee approved Glass-Steagall legislation Friday, as details began to emerge on a Republican leadership initiative that would limit national bank insurance powers.
At the request of House Banking Committee Chairman Jim Leach, four groups with widely different perspectives submitted legislative language that would implement the leadership's plan to rein in the Comptroller of the Currency.
The plans, submitted by the American Council of Life Insurance, the American Bankers Association, the Independent Bankers Association of America, and the Federal Reserve will be used by Rep. Leach to fashion the final amendment.
Rep. Leach incorporated the Fed approach in a regulatory relief bill he introduced last week in preparation for a committee vote. Although Rep. Leach said the central bank's version of the Comptroller's office prohibition is only a "placeholder" in the bill, the banking committee chairman is known to hold the central bank in high regard.
"The fact that the Fed language is in the bill suggests that of the alternatives it was the one that Mr. Leach felt most comfortable with because it was drafted by a putatively nonpartisan organization," said Karen Shaw, president of ISD/Shaw.
The Fed language says that the Comptroller shall not allow national banks to sell any insurance products unless authorized as of June 12, 1995.
House leaders last week tentatively approved a plan to attach a "Comptroller's moratorium" to regulatory reform legislation, which in turn would be merged with the Glass-Steagall bill in the House Rules Committee.
In the memo, Rep. Leach took note of the subtle differences in each organization's language and warned that the devil is in the details.
"One industry's status quo is another's tilt," Rep. Leach added. "Accordingly, I have urged all parties not to be too 'macho.' I have also urged various interested parties to seek common ground, but I have doubts precise consensus is possible."
There are a few differences between the IBAA and ABA language. However, the ABA proposed that the restraints be incorporated in a moratorium that would expire at the end of 1997, rather than the permanent ban sought by the insurance industry.
The ABA charged that the insurers' language would give states new power to limit bank activities. The insurance industry language would also protect institutions battling in court over specific insurance powers if they win their cases.