Will 1995 be the year that the Glass-Steagall Act finally tumbles?

On Capitol Hill, Glass-Steagall has always seemed strong enough to withstand a nuclear holocaust. Efforts to repeal the 1933 law have been beaten back every time, usually by Rep. John D. Dingell, the redoubtable chairman of the House Energy and Commerce Committee.

But the House Banking Committee's Republican leader, Jim Leach of Iowa, raised the prospect of Glass-Steagall reform in a recent speech, contending that his panel is now ready to make common cause with its longtime foe, Energy and Commerce.

The two panels will work together, he said, "on issues related to the functional regulation of capital market activities, including Glass-Steagall reform and mutual fund practices."

Rep. Leach was on the campaign trail back home this week and unavailable for comment. But aides say the Republican lawmaker has an open mind on Glass-Steagall, and may be ready to support an overhaul of the law's separation of the commercial and investment banking industries.

"We are totally open-minded on the question of new powers," said one Republican aide.

Likewise, aides to House Banking Committee Chairman Henry B. Gonzalez say the Texas Democrat is ready to work with Energy and Commerce on reform.

A rapprochement between Banking and Energy and Commerce would be a momentous event for Glass-Steagall foes. Energy and Commerce is the personal preserve of Rep. Dingell, and the Michigan Democrat treats Glass-Steagall as more of a calling than a mere legislative issue.

Still, nobody should hold his breath waiting for Glass-Steagall repeal. It's not as complicated or as controversial as health care reform, but it may be a close second.

To begin with, the affected industries are far from united on Glass-Steagall. A simple repeal of the law would be acceptable to many banks, but would likely run into opposition from securities firms.

To gain broad acceptance among nonbank financial companies, Congress would have to go further and permit investment banking companies affiliated with commercial and industrial concerns to also buy banks -- the so-called two-way street.

But that brings banking and commerce into play and with it a whole range of nettlesome issues. Rep. Leach, for one, is adamantly opposed to the idea of permitting combinations of industrial companies and banks, as are many community bankers.

And even if the banking and securities industries could agree on a measure that effectively repeals Glass-Steagall while maintaining the barrier between banking and commerce, the insurance lobby would likely ask for a place at the table.

Insurance groups can be expected to use any measure bank powers bill as a vehicle to limit bank insurance activities -- particularly in the area of annuities.

The banking industry would fight any bill that included limits on insurance powers, and would likely win that fight.

Some wild cards remain, particularly the midterm congressional elections. If Republicans make significant gains, both House Banking and Energy and Commerce may be more hospitable to Glass-Steagall reform.

In addition, key committee chairs are still in doubt. It appears now that Rep. John LaFalce, D-N.Y. will take control of the House Banking subcommittee on financial institutions, the panel with jurisdiction for Glass-Steagall.

In the past, Rep. LaFalce has always been with the reformers who wanted to dismantle Glass-Steagall. If he takes the subcommittee chair, he would be in a position to put Glass-Steagall reform on the agenda.

That's not the same as passing a law, of course, but the ability to set the agenda is one of the most potent weapons in a chairman's arsenal.

Interstate branching owes much of its success this year to the fact that an advocate, Rep. Stephen L. Neal, D-N.C., chaired the financial institutions subcommittee.

Still Glass-Steagall repeal is at best a long shot for next year. "I see some modernization of Glass-Steagall," said an aide to Rep. Gonzalez. "But I don't see full-scale repeal."

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