WASHINGTON -- The House Banking Committee would have sole jurisdiction over reform of the Glass-Steagall Act under a new Republican leadership plan -- a move that would remove a major roadblock to legislation allowing banks to underwrite municipal revenue bonds, congressional sources said yesterday.
The leadership plan would allow the House Energy and Commerce Committee to retain jurisdiction over securities issues, but the energy panel no longer could block attempts by the House Banking Committee to reform the Glass-Steagall Act of 1933 to remove barriers between investment and commercial banking, congressional sources said.
And in a victory for state and local officials, the House Republican plan would eliminate a proposal to move the housing subcommittee from the banking panel to the Education and Labor Committee, the sources said.
House Republicans still must ratify the arrangement, probably next Wednesday when they meet to ratify the heads of committees and House Republican Conference rules.
Sources said the new leadership plan represents an accommodation of the prospective chairmen of the energy and banking panels and the next House speaker, Rep. Newt Gingrich, R-Ga.
Rep. Thomas Bliley Jr., R-Va., is expected to become chairman of the Energy and Commerce panel, while Rep. Jim Leach, R-Iowa, plans to take the helm of the Banking Committee.
Leach said in a recent interview that he would be supportive of ending distinctions between investment and commercial banking as long as insurance remains a state-regulated function.
House Republicans, including Bliley and Rep. Jack Fields of Texas, expressed their dissatisfaction to Gingrich last week with earlier GOP plans to reorganize the House, which would have eliminated committee leadership slots for Fields and Bliley, a lobbyist said.
These Republicans said the plan would upset members of the party at a time when unity is needed to push through the GOP's "Contract with America" in the first 100 days of the next Congress, the lobbyist said.
Representatives of the securities industry have lobbied hard to keep jurisdiction over securities issues within the House Energy and Commerce Committee, but banking lobbyists have long sought to keep the panel out of the long-running debate on Glass-Steagall reform.
A major question is how the separation of Glass-Steagall issues from other securities issues will be applied as a practical matter, the sources said.
A House rule dealing with committee jurisdiction is expected to be interpreted so that the Energy and Commerce Committee will not have jurisdiction over Glass-Steagall reform when the House Banking Committee takes it up, a source said.
But how reform issues would be handled separately from securities issues on substance is "fuzzy," one of the sources said.
The current Energy and Commerce chairman, Rep. John Dingell, D-Mich., most recently blocked Glass-Steagall reform legislation in 1991 after the Banking Committee voted to repeal it.
The law now generally allows banks to underwrite general obligation bonds, but not revenue bonds. The Federal Reserve Board has made certain exceptions by allowing roughly 30 banks to underwrite revenue bonds through affiliates under Section 20 of the act. But most banks do not qualify for such activity under Fed regulations.
Representatives of the American Bankers Association and the Securities Industry Association could not be reached for comment on the GOP plan.
The Republicans' original plan to move the housing subcommittee to the Education and Labor panel was part of a move to revamp the Education Committee and rename it the Empowerment Committee. It was unclear late yesterday whether the panel would still be renamed.
State and local officials had objected to the shift in a letter to Gingrich that was released yesterday. The officials contended that changing the jurisdiction of the subcommittee would make it more difficult for proponents to work for housing program reauthorization and improvement.
"Maintaining all of the housing and community development programs within the jurisdiction of the House Banking Committee provides a single focal point for oversight as to their effectiveness and improvement," the officials said in the letter, dated Nov. 23.
The letter was signed by representatives of the National League of Cities, Association of Local Housing Finance Agencies, National Association of Housing and Redevelopment Officials, and National Community Development Association.
Banking Committee aides said the housing subcommittee has been part of the panel for at least 30 years. For the municipal market, the subcommittee oversees several key programs, including Community Development Block Grants, HOME, the Section 8 rent subsidy program, and the Federal Housing Administration's mortgage insurance programs.
Another Republican proposal was to move responsibility for overseeing the block grant program from the housing subcommittee to the House Public Works and Transportation Committee, which would be renamed the Public Infrastructure Committee. There was no word late yesterday about the fate of the proposal.