The House Commerce Committee will begin voting on financial reform legislation during the week of Oct. 20, chairman Thomas Bliley said Thursday.

The Virginia Republican said a deal reached Wednesday by banking and insurance trade groups removes a major obstacle to financial reform. The agreement spells out which financial products would be regulated by state insurance officials.

Rep. Bliley acknowledged, however, that "a number of outstanding issues" must be resolved before a committee vote is possible. Those issues include establishing rules for securities and insurance sales by banks and spelling out how diversified financial holding companies should be regulated.

House Majority Leader Richard Armey said a consensus must be reached next week if the House is to pass the legislation before Congress adjourns Nov. 7.

Reps. Armey and Bliley made their comments following a meeting of GOP leaders and heads of the House Banking and Commerce committees. Rep. Armey praised the compromise reached Wednesday, but would not predict whether the remaining issues can be settled in time. "It's helpful, but there's a lot more to do," he said.

Rep. Bliley said Commerce's finance and hazardous materials subcommittee, chaired by Rep. Michael Oxley, would vote on the legislation first if the issues are resolved, followed quickly by the full committee.

Wednesday's agreement would force states to let national banks continue offering any product they were authorized to underwrite as of Jan. 1, 1997.

However, banks would be forbidden to underwrite any new product that qualifies for tax breaks specifically granted to insurance companies. For instance, the Internal Revenue Service has ruled that the investment earnings generated by term and whole life insurance premiums are tax- exempt.

Bank insurance sales would not be limited by the agreement.

House Banking Committee Chairman Jim Leach described the agreement, brokered by Rep. Oxley, as a "terrific move." Rep. Leach said he had "great hope" that the Commerce Committee would approve the bill this month.

So far, Columbus, Ohio-based Banc One Corp. and NationsBank Corp. are the only banking institutions to endorse Rep. Oxley's compromise. But he told reporters Wednesday that he expects more banks to voice support soon.

"Clearly, some other banks are close to signing on," he said. "But I realize we'll never get 100% of the banking industry."

Edward L. Yingling, chief lobbyist for the American Bankers Association, described Rep. Oxley's plan as "movement in the right direction," but said the ABA would not take a stand until more banks had a chance to review it.

Mr. Yingling pointed out that banks remain opposed to other parts of the Commerce Committee bill. For example, bank operating subsidiaries would be limited to activities also permitted for banks themselves. Also, judges would no longer be required to defer to federal banking regulators when disputes with state officials end up in court.

The American Council of Life Insurance, one of the trade groups that negotiated the deal, cautioned that its member companies must still approve the agreement.

The Independent Insurance Agents of America is likely to continue its opposition to other provisions in the Commerce Committee's reform proposal. A major reason for IIAA's opposition: the Commerce Committee would preserve current law allowing federal banking regulators to preempt state insurance sales rules. "We believe this is an oversight we cannot accept," said Jeff Myers, IIAA spokesman.

But Mr. Oxley called on the agents to drop that demand. "We've already bent over backward to assuage the agents' concerns," he said. "They're not going to get everything they want."

Still, Rep. Gerald Solomon, who chairs the powerful Rules Committee, said the agents must be brought on board. "This is a states' rights issue and that's key for me," he said.

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