House Commerce Committee Chairman Thomas J. Bliley Jr. vowed Tuesday to use the financial reform bill to reverse decisions that the Comptroller of the Currency made on bank insurance sales.
Separately, the Virginia Republican asked House Speaker Newt Gingrich for three months to work on the legislation, which was approved by the House Banking Committee on Friday.
Although House leaders have not said which parts of the reform package Commerce will be allowed to rewrite or how much time it will have, Banking Committee Chairman Jim Leach has said he wants the full House to vote on the legislation before the August recess.
Rep. Bliley's comments were issued at a Commerce finance subcommittee hearing, the first of several expected on financial reform.
"We will begin the process of rebalancing the playing field," Rep. Bliley said.
Banks "should be able to offer consumers a full array of products to choose from," he said, "but it should be done in accordance with the law, not in mockery of Congress and the legislative process."
Rep. Bliley was particularly upset that the Comptroller's Office allows national banks with offices in small towns to sell insurance anywhere.
"This is self-promoting, legal rationalizing at its worst, and inexcusable for a government agency," he said.
Rep. Michael G. Oxley, who chaired Tuesday's hearing, said the reform package was "pulled in a hundred different directions" by House Banking, but that Commerce will reshape the measure "into a comprehensive and cohesive reform package."
Much of Tuesday's hearing focused on an insurance bill approved in May by the Illinois General Assembly that would allow state banks to sell insurance.
The bill represents a compromise between insurance agents and bankers, said Arthur R. Wilkinson, chief executive of the State Bank of Bement, Ill.
"Our industries simply realized that the time had come to resolve this long-standing issue," said Mr. Wilkinson, who is president of the Illinois Bankers Association.
"We believe the results are fair and workable."
Dino Gavanes, representing the Professional Independent Insurance Agents of Illinois, agreed.
"Despite the public rhetoric of a handful of banking organizations, in fact agents and bankers have been working together at the state level," said Mr. Gavanes, who is an Illinois insurance agent.
"It didn't make sense to be too restrictive because it would hinder bank operations."
The Illinois bill, which awaits the governor's signature, would let any employee at banks with less than $100 million of deposits sell insurance from anywhere in the lobby.
Loan officers at larger banks would be barred from selling insurance, and the products would have to be sold in a part of the bank separate from the lending and deposit-taking areas.
The measure also would restrict banks from using health information from insurance records to make credit decisions.
In an interview after the hearing, Rep. Oxley said he hoped a similar compromise could be struck at the federal level.
"A large industrial state like Illinois is a microcosm of the United States," the Ohio Republican said.
"It's a positive sign that these kinds of prickly issues can be resolved."