Republicans and Democrats on the House Banking Committee debated Chairman Jim Leach's Glass-Steagall repeal bill to a standstill Thursday.
The committee will resume consideration of the legislation Tuesday.
Democrats on House Banking said they will not support Rep. Leach's bill unless it contains new consumer protection rules, including a broader application of the Community Reinvestment Act. But committee Republicans are dead set against new regulatory burdens.
"If we are only going to vote on legislation that extends bank powers, then the needed consensus isn't going to be there," said Rep. Barney Frank, D-Mass.
During Thursday's three-hour hearing, the committee voted on just three of the 81 amendments to the bill presented by members.
Republicans on Thursday shot down Democratic amendments that would have forced banks to offer low-cost basic banking services and forbidden some ATM user fees. Rep. Leach forbade a vote on those amendments after Rep. Marge Roukema, R-N.J., argued the proposals were not germane.
The one amendment approved Thursday would require banks to gain a satisfactory CRA rating before affiliating with a securities company.
Rep. Leach must reach out to Democrats or see his bill die. Republicans on the committee only hold a six-vote margin, and several GOP members are expected to vote against the legislation.
"I am hopeful the better angels of our nature will be emphasized as we go forward," Rep. Leach said.
Rep. Bill McCollum, R-Fla., has vowed to vote against the package because of restrictions on banks' ability to enter the insurance business. Other Republicans, under heavy fire from banks opposed to the bill, are expected to vote no as well.
Rep. Leach's bill repeals the Depression-era law separating commercial and investment banking. It also allows banks and insurance companies to affiliate. Provisions laying out rules for insurance sales by banks have divided the industry. Most banks oppose the bill, but a number of money- center banks back it.
The committee passed similar legislation repealing Glass-Steagall last May, but Rep. Leach rewrote the measure after disputes between bank and insurance trade groups stalled it. Arguing that the revised Glass-Steagall package was drastically different, Democrats pressured Rep. Leach into holding a new vote on the bill.
Rep. Leach also has backed off from plans to package his bill with legislation granting banks regulatory relief. He separated the two bills, hoping to avoid the very partisan deadlock that developed Thursday.
Democrats said splitting the two bills didn't erase their concerns. Rep. Joseph Kennedy, D-Mass., said he is worried the reform bill will narrow CRA's reach as banking companies move assets into new businesses, such as securities and insurance. He suggested requiring extending CRA's reach to the uninsured wholesale financial institutions created by the bill.
"I'm afraid that this will be used as a backdoor attempt to gut CRA," he said. "If you can assure us otherwise, you might find a great many Democrat members are willing to support you."
Though Sen. Kennedy and other Democrats said they may support the bill if Republicans are willing to compromise, Clinton administration officials are adamantly opposed.
Treasury Under Secretary John D. Hawke attended Thursday's vote to make last-minute appeals to lawmakers. In a letter to Rep. Leach, Mr. Hawke said the legislation would create needless regulatory burdens, impede competition, and draw capital out of banks.