House Blocks Back-Door Bid to Bar OCC From Expanding Banks' Powers

The House of Representatives on Wednesday rejected a key lawmaker's 11th-hour bid to block the comptroller of the currency from further expanding the powers of national banks.

The proposal by Rules Committee Chairman Gerald B.H. Solomon, R.-N.Y., would have withheld the pay of government employees who worked on projects relating to expanded powers. The measure, offered as an amendment to the Treasury Department appropriations bill for fiscal 1997, failed on a vote of 312 to 107.

Rep. Solomon has repeatedly criticized the Comptroller's Office for letting national banks expand their insurance activities. A former insurance agent himself, the lawmaker had strong backing from the agents' lobby.

But the plan drew heavy fire from the banking industry, House Democrats, and the Treasury Department, which oversees the Comptroller's Office.

Treasury Secretary Robert E. Rubin, in a letter Wednesday, called the measure a back-door attempt by the insurance industry to restrict bank insurance sales.

"This amendment would force a result that certain special interest groups have been unsuccessful in convincing Congress to accept on merit: the imposition of anti-competitive, anti-consumer restrictions on the currently authorized powers of national banks to offer new products," Mr. Rubin told Rep. Jim Lightfoot, the Iowa Republican who leads the House Appropriations Committee's Treasury subcommittee.

The banking lobby, meanwhile, kicked into high gear. On Wednesday morning, the American Bankers Association and the Independent Bankers Association of America faxed alerts to members, urging them to call their lawmakers in opposition to the measure.

"It sets a very dangerous precedent by using an appropriations bill to carry forward a policy agenda of a designated group - the insurance agents - that is very detrimental to another group - the banks," said IBAA executive vice president Kenneth Guenther.

Reached for comment after the vote Wednesday afternoon, Mr. Guenther was pleased, yet cautious. The Solomon amendment, he said, "shows that the Republican leadership seems to be committed to trimming bank insurance sales, so there will be other attempts, in this Congress or the next."

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