Republican leaders vowed Wednesday to push financial reform through the House next month, and insisted there remains enough time to get the legislation through the Senate this year.
House Republican Conference Chairman John Boehner told reporters that he expects the legislation to pass with enough votes that Senate leaders will be willing to move the legislation quickly.
"I expect strong bipartisan support in the House," he said.
Securities and insurance interests came out in favor of the compromise package that House leaders unveiled Tuesday, while banking industry leaders began laying plans to defeat it.
"This is truly a landmark agreement that will ensure continued U.S. competitiveness in international markets, while benefiting every American who is a consumer of financial services," said Merrill Lynch chairman and chief executive officer David H. Komansky.
"The stalemate preventing reform of the financial services laws appears to be over," said Carroll A. Campbell Jr., president of the American Council of Life Insurance.
While many bankers want the outdated laws governing their operations overhauled, they oppose specific provisions in the bill. Lawmakers may make the bill even less palatable by adding in new language that would let credit unions accept more members.
"This is an enormously dangerous bill for bankers," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America. "It curbs the authority of the Comptroller of the Currency and will likely be tied to totally unacceptable credit union legislation."
The thrift industry blasted the deal, too.
America's Community Bankers, Citicorp, and other members of the Thrift Charter Coalition described proposed limits on thrift powers as "retrograde, anti-competitive and out of place in legislation intended to position our financial system for the 21st century."
Despite GOP leaders' optimism, fierce industry opposition dims chances that the legislation can be enacted before Congress adjourns this fall, several sources said.
"I don't believe anyone today-despite my continued hope of financial reform-would guess that this legislation will successfully make it through the House and Senate before the conclusion of this Congress," Rep. Richard Baker, R-La., said at a House Banking Committee hearing Wednesday.
"There simply is not enough time," added one Senate aide. "Even a good- faith attempt to pass a bill in the Senate would fall short."
Further dampening the bill's chances is expected opposition from the Clinton administration. While a spokesman said Treasury Department officials have just begun reviewing the bill and could not comment Wednesday, the administration has repeatedly said it will not support a bill that restricts the Office of the Comptroller of the Currency.
The compromise package would let the banking, securities, and insurance industries merge, but would also:
Bar bank operating subsidiaries from insurance underwriting;
End the deference courts currently afford the Comptroller of the Currency in disputes with state officials;
Allow existing unitary thrift holding companies to earn 15% of their revenue from nonfinancial business while restricting new diversified financial holding companies that acquire banks to commercial revenues of 5%.
Bankers' opposition is likely to intensify if House leaders go ahead with plans to attach legislation expanding credit union membership. Many lawmakers have called for a bill that would reverse the Supreme Court's Feb. 25 decision limiting the membership of employer-based credit unions.
In a memo to members, American Bankers Association chief lobbyist Edward L. Yingling told bankers to prepare for an "emergency grassroots effort" against the plan. "Bankers across the country will be outraged if the Republican Congress uses a bad credit union bill as the 'rocket fuel' to pass a bad version" of financial reform," Mr. Yingling wrote.
House leaders have been quoted as saying the credit union measure could provide "rocket fuel" to the reform bill, speeding it to passage.
Not all bankers trashed the deal.
Banc One Corp. lobbyist Annie Hall, who negotiated securities and insurance provisions with House leaders, was a rare banking industry representative who endorsed the bill. "We think they've done a fantastic job," she said.
She pointed out that the new plan is a big improvement over versions that passed the Banking and Commerce committees last year. For instance, the bill no longer would prevent a bank from using the same employee in its trust and broker-dealer operations. Also banks would be allowed to offer loan syndicate participation to corporate customers, not just other banks and thrifts.
"If Banc One had written this bill it would been more pro-bank," she said. "But what we have is a compromise that makes no one truly happy. That's how legislation works."