Confronted with House Speaker Newt Gingrich's March 4 deadline, lawmakers scrambled Tuesday to find a compromise on financial reform legislation.
House Banking Committee Chairman Jim Leach said lawmakers are close to an agreement on a plan to retain the thrift charter, but limit its powers. "We are exceptionally close," the Iowa Republican said in an interview.
Progress also is being made on provisions governing bank securities activities and a compromise on insurance sales represented the next major hurdle, he said.
Rep. Leach said he was unsure whether today's deadline for a deal would be "precisely met" but remains "hopeful" the House will approve a bill this spring.
Speaker Newt Gingrich last week ordered the Banking and Commerce committees to hammer out a consensus by March 4, saying House leaders are "emphatically committed to bringing financial services reform legislation to the floor prior to the April recess." Congress begins a two-week recess April 2.
If Congress fails to act this year, Federal Reserve Board Chairman Alan Greenspan on Tuesday threw his weight behind a moratorium on thrift charters for nonbanks.
"In the event that nothing happens in 1998, I would support a moratorium on the purchase of unitary thrifts by companies that cannot now own banks," Mr. Greenspan said in response to a question after a speech to the Independent Bankers Association of America's annual convention in Hawaii.
"This is righteous," said outgoing IBAA president William D. Sones. "We feel that these nonbanks are taking advantage of this loophole to jump ... into activities that may prove unsound in the future."
But even with Mr. Greenspan's support, a moratorium is a long shot.
The Treasury Department and the Federal Deposit Insurance Corp. oppose the move. "I'm not persuaded a moratorium is the right way to go," acting FDIC Chairman Andrew C. Hove Jr. said Tuesday, noting that dozens of nonbanks already own thrifts.
A freeze on thrift charter applications would be an "exceedingly shortsighted policy," said John D. Hawke Jr., Treasury's under secretary for domestic finance. "The history of moratoriums in the financial services area is not great. They tend to be an expedient that serves no purpose other than retarding progress and relieving pressure for real reform."
The deal taking shape in the House is sure to outrage bankers, who have made elimination of the thrift charter a top priority.
Even thrift executives on Tuesday said they feared the details of any last-minute deals. "I doubt there will be any compromises in that bill that we will find palatable," said Robert R. Davis, government relations director for America's Community Bankers.
Under the emerging deal, thrifts would remain subject to rules limiting business lending and would be required to follow interstate branching restrictions. Thrift oversight would be switched to banking regulators. Powers of existing thrifts would be grandfathered.
Rep. Leach acknowledged the deal represents a compromise for thrifts. "You have to have trade-offs," he said.
But ACB president Paul A. Schosberg said the industry will not give up any powers. "If the charter that results is a diminished charter, then that is not a charter this industry is going to embrace," Mr. Schosberg said.
While it is still too soon to declare the bill dead in the House, action in the Senate this year grows less likely every day.
Senate Banking Committee members Rod Grams, R-Minn., and Carol Moseley- Braun, D-Ill., said this week that they do not think the Senate will have time to consider such complex legislation this year.
- Jaret Seiberg contributed to this story from Honolulu.