House Banking Committee Chairman Jim Leach has hinted in recent weeks that he's willing to compromise on financial reform by letting banks enter a small amount of commercial business.
But so far, Rep. Leach has not budged from the meager offering in his bill, which would allow owners of uninsured wholesale financial institutions to invest 7% of their assets in commercial businesses.
Asked Monday after a speech whether he really plans to compromise, Rep. Leach refused to answer. Instead the Iowa Republican said he will present his latest thinking Wednesday when he testifies before House Banking's capital markets subcommittee.
"It will be a very interesting statement on Wednesday," Rep. Leach said.
Administration officials, congressional staffers, and industry lobbyists said they knew nothing of Rep. Leach's plans.
However, American Bankers Association chief lobbyist Edward L. Yingling said many industry lobbyists have become convinced that Rep. Leach is willing to let banks enter a limited amount of commercial business.
One clue came Feb. 19 in a speech to the Exchequer Club, when Rep. Leach suggested that the commercial "basket" for wholesale financial institutions be increased from 7%.
Though his legislation would forbid owners of federally insured institutions from holding any nonfinancial assets, many of the industry experts attending the lunch left convinced that Rep. Leach would consider opening the door for commercial banks.
"People did draw the conclusion that he would be open to considering a small commercial basket for banks," Mr. Yingling said.
Some lobbyists also speculated that Federal Reserve Chairman Alan Greenspan's Feb. 13 endorsement of an unspecified "small commercial basket" for banks persuaded Rep. Leach to compromise.
Separately, 36 companies ranging from American Express Co. to Hawaiian Electric Industries to J.P. Morgan & Co. asked Treasury Secretary Robert E. Rubin to support "the broadest possible model of reform."
"Affiliations should not be restricted by a definition or interpretation over what is and what is not financial," the March 5 letter states.