WASHINGTON - Senate Banking Committee Chairman Phil Gramm plans to shift his focus to securities and other nonbanking matters, but the Texas Republican vowed Wednesday to defend banks against more consumer privacy and community reinvestment restrictions.
In a wide-ranging news conference to detail his 2000 agenda, Sen. Gramm urged lawmakers to give privacy restrictions enacted in the Gramm-Leach-Bliley Act a chance.
"We have written the most dramatic change in law on privacy in American history," he said. "I want to see how it works. I want to know what the problems are, if there are problems, before we do more."
Regulators are expected today to start releasing proposals to implement the privacy provisions. [See related story on page 2.] But the rules will not take effect until Nov. 12, more than a month after Congress is scheduled to adjourn. Lawmakers, Sen. Gramm said, should wait on this and other major initiatives until a new administration and Congress are elected.
"This is an issue which is being driven by polls and politics," he said. "I am not going to let the Information Age be killed off before it is ever born."
A critic of the Community Reinvestment Act, Sen. Gramm said he would scrutinize implementation of the CRA-related requirements in the reform law and conduct hearings about community group protests of bank merger applications that focus on the applicants' CRA compliance.
The committee is reviewing data on thousands of applications that, according to his staff, show protests have more to do with the size and deep pockets of an applicant rather than its CRA performance. It is also studying how much sway protests have on decisions by regulators. Sen. Gramm said the committee would also review a Federal Reserve Board study due March 15 on the default rates and profitability of CRA loans.
On pending nominations, Sen. Gramm defended himself against critics who say he is stalling the confirmation of former banker Carol J. Parry and the reconfirmation of Vice Chairman Roger W. Ferguson Jr. to the Fed until next year in case a Republican wins the presidency.
"You always have a potential problem in the last year of the administration when you are appointing people to 14-year terms," he said. "Obviously, we are going to have very high standards here, and we are going to have to be totally satisfied before we are going to move any nominee for any term that is going to go one day past Jan. 20."
He noted that Mr. Ferguson will stay in his job even though his term expired Monday. And the White House, he noted, took more than a year before nominating Ms. Parry in August. Senate Banking is about to start its due diligence of Ms. Parry, Sen. Gramm said, adding that he would meet with the former Chase Manhattan Corp. executive.
Sen. Gramm also said he favors merging the bank and thrift deposit insurance funds, the commercial bank and thrift charters, and the Comptroller of the Currency and the Office of Thrift Supervision. (Rep. Marge Roukema, head of House Banking's financial institutions subcommittee, has proposed a similar plan and scheduled a Feb. 16 hearing.)
Sen. Gramm said he would hold hearings on these proposals but probably would not offer legislation because he does not believe lawmakers will pass such a complex, controversial issue this year.
He discussed little legislative activity that would directly affect banks except the possibility that the Senate would approve the regulatory relief bill passed by the committee last year, and shield swaps from government regulation. Finally, Sen. Gramm suggested requiring the Fed chairman to testify before Congress on monetary policy once a year, rather than twice.