House Panel Approves Recap Bill
Broader Reform Package Might Still Reach Floor
WASHINGTON -- The House Banking Committee approved legislation Wednesday that would recapitalize the deposit insurance fund. But a broader measure could still emerge on the House floor.
The narrow bill, approved 37 to 15, would provide $70 billion for the Bank Insurance Fund and tackles a few related issues, such as early closure of troubled institutions.
Members voted with the clear understanding that the House leadership, acting through the Rules Committee, would permit floor votes on a number of major amendments, including one that would permit banks to branch across state lines.
If that occurs, the Bush administration would get a last shot at crafting a comprehensive bill.
But the panel's invitation to the Rules Committee to write the bill also exposes the banking industry to considerable risk.
Rep. Gerald Kleczka, D-Wis., raised the prospect of seeking a moratorium that would bar the Federal Reserve from approving new securities activities for banks under Section 20 of the Glass-Steagall Act.
Congressional aides said Energy and Commerce Chairman John D. Dingell, D-Mich., a foe of new bank powers, might try to pair that moratorium with a measure proposed by Rep. James A. Hayes, D-La., limiting bank insurance activities.
A similar moratorium was included in the 1987 Competitive Equality Bank Act.
Kennedy Amendment on Hold
Other amendments, including a measure to combat loan discrimination proposed by Rep. Joseph Kennedy 2d, D-Mass., could also be sent to the floor, either for separate votes or as part of the package.
Rep. Chalmers Wylie of Ohio, the panel's ranking Republican, said Chairman Henry B. Gonzalez, D-Tex., had committed to support allowing the introduction of amendments, which could restore the entire bill except for part of a section dealing with insurance and securities powers.
However, Mr. Gonzalez was vague about his intentions, and warned that he "would be fooling myself to think I have that much influence" with the Rules Committee, which decides which bills and amendments go to the floor.
Meanwhile, the Senate has postponed action on the bill indefinitely, after concluding that the 60 votes needed to limit debate would be difficult to obtain.
The bill could be called up next week, but the Senate Banking Committee's party-line vote against the renomination of Comptroller Robert Clarke on Wednesday could further poison the atmosphere for banking legislation.
In addition, the Senate is likely to wait until the House acts before scheduling floor votes on the controversial package.
The House panel, which resumed work on the measure after Monday night's crushing defeat of the administration's omnibus bill, divided Wednesday between those who wanted to craft a broad bill and those who wanted to turn the process over to the leadership.
"I think a noncontroversial package could be put forward" by the House leadership, added Rep. Barney Frank, D-Mass. Interstate branching could be included, he said, but adding measures that address other bank powers would make the bill "excessively complicated."
More Leisurely Approach
"What's the point of serving on this committee if we're not going to make our own decisions?" asked Rep. Peter Hoagland, D-Neb. "We're not in that big a hurry. Let's take a couple of days and do it right."
Rep. Charles Schumer, D-N.Y., said the panel "should stand united" behind a package of its own design. "Rules should not pick which amendments they are going to allow."
Outside the committee, observers were stunned at the direction taken by the banking committee.
Stephen Verdier, the House lobbyist for the Independent Bankers Association of America, which is pressing for a narrow bill, called the panel's decision "preposterous," particularly in light of the bitter turf war it waged with Energy and Commerce over jurisdiction over banking issues.
Rep. Wylie said it was unrealistic to believe the banking committee has time, this late in the congressional session, to renew debate on a big package.
Some members suggested that interstate branching enjoys broad support. An amendment sponsored by Rep. Bruce Vento, D-Minn., and Rep. Doug Bereuter, R-Neb. - that would permit cross-border branching, but give states the right to opt out -- passed on the floor by a wide margin. A number of observers argued that the vote on Vento-Bereuter demonstrates a consensus for interstate branching.
But Sam Baptista, president of the Financial Services Council, said most House members voted for Vento-Bereuter as a way of limiting the interstate branching measure sent to the floor by the banking committee.
"The question people have to ask themselves is whether Vento was a pro-interstate vote or a limiting vote," he said. "I think it was limiting."
Paul Equale, chief lobbyist for the Independent Insurance Agents of America, expressed optimism Wednesday that the package shaping up would bar banks from marketing insurance nationwide either from Delaware or from small towns.
PHOTO : Rep. Henry Gonzalez Vague about his intentions