WASHINGTON - The House could vote as early as today on legislation intended to pry open markets in countries that discriminate against U.S. banks, but the bill may encounter resistance in the Senate.
"It's the end of the session, and any one senator has the power to block it," said Senate Banking Committee Chairman Donald W. Riegle Jr., D-Mich.
The National Treatment in Banking Act is a scaled-back version of the Fair Trade in Financial Services bill that stalled during the conference on the community development bank bill. The latter covered all sectors of the financial services industry.
The more limited bill, sponsored by Rep. Charles Schumer, D-N.Y., focuses on banking. It would authorize the federal government to retaliate against foreign countries that treat U.S. banks unfairly.
"This stands as a very powerful symbol in trade that we expect reciprocal treatment," said Rep. Jim Leach, R-Iowa, who co-sponsored the measure.
A few large banks had feared that earlier versions of the fair trade bill might trigger retaliation against U.S. banks from Japan and other foreign countries if the United States acted against Japanese securities firms.
However, since the Schumer bill's impact has been limited to banks, "we've done away with any cross-sectoral retaliation concerns" said Rep. Barney Frank, D-Mass.
Nonetheless, lawmakers at a House Rules Committee hearing last Friday still expressed some concern that foreign countries may view the legislation as a form of U.S. protectionism.
Remedying the potential for cross-sectoral retaliation "doesn't mean countries in the Pacific Rim won't respond negatively to this," said Rep. David Dreier, R-Calif.
Under the Schumer bill, the Treasury secretary would identify countries that deny U.S. banks national treatment. Banking regulators would have to take the Treasury's evaluation into account when deciding whether to authorize foreign banks to enter the U.S. market.
The bill's foundation is a 1988 law requiring the Treasury Department to identify countries that deny U.S. financial institutions fair competitive opportunities.
Although it enjoyed broad bipartisan support, Fair Trade in Financial Services got tangled up in a jurisdictional dispute between the House Banking Committee and two other panels, including the Ways and Means Committee.
Ways and Means feared the bill would undermine its authority by influencing U.S. international trade law.
In an apparent move to avoid sharing jurisdiction for the measure with the powerful Ways and Means Committee, Rep. Schumer narrowed the bill's focus.