A key vote on financial reform legislation is on for Friday, but the measure is still being attacked from many sides.
Rep. Michael Oxley, R-Ohio, predicted Wednesday that the legislation would pass his House Commerce finance subcommittee with little opposition because disputes with the panel's Democrats over regulation of bank insurance sales had been settled.
But staffers for Rep. John Dingell, the Commerce Committee's ranking Democrat, said negotiations were still under way and no deal had been struck.
Also Wednesday, the Clinton administration repeated its strong opposition to several provisions in Rep. Oxley's legislation while a Commerce Committee Republican voiced objections that it restricts bank securities sales.
It was hard for Washington insiders to get a fix on the situation because as of late Wednesday Rep. Oxley had not provided an updated version of his bill.
But industry sources said several changes will draw strong opposition from bankers. For instance, sources said Rep. Dingell insisted that Rep. Oxley remove a provision that would have prevented state insurance officials from taking any action that would "restrict" insurance sales by national banks.
Rep. Dingell and insurance industry lobbyists have argued that the word strips states of any power to regulate bank insurance sales.
Banc One Corp. lobbyist Annie Hall said the latest plan destroys a compromise reached two weeks ago between banks and insurance industry groups spelling out which financial products would be regulated by state insurance officials.
"We have no choice but to oppose this legislation adamantly," she said. "Banc One's support was predicated on a painfully crafted compromise, but the insurance industry wanted and got a larger bite out of the apple."
Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America, predicted that bank industry opposition would grow stronger when Rep. Oxley's legislation is revealed. "I find it hard to believe that any legislation with broad support in the insurance industry would be accepted by bankers," he said.
But Independent Insurance Agents of America spokesman Jeff Myers told Reuters, "We are 100% on board with it."
Treasury Under Secretary John D. Hawke Jr., in a letter to Rep. Oxley, complained that his bill would limit bank operating subsidiaries to activities also permitted to banks themselves.
"We cannot support any bill that would discriminate against national banks by prohibiting them from engaging through operating subsidiaries in the same range of financial activities as are permitted for holding company affiliates," he wrote.
Mr. Hawke also warned that the administration would oppose plans to preserve the barriers between banks and nonfinancial firms.
In a separate letter to Rep. Oxley, Rep. Rick Lazio, R-N.Y., protested that the legislation would impose restrictions on bank securities sales that "make little sense."
For instance, the legislation would give the Securities and Exchange Commission sole authority to decide which products may be sold only through holding company affiliates.
Also, trust services for employee benefit plans would have to be conducted in a holding company affiliate rather than a bank.
J.P. Morgan & Co. lobbyist Cory Strupp said Rep. Oxley has focused on settling insurance-related disputes and has neglected disagreements over the bill's securities provisions. "This may be a big source of opposition from banks," he said.
Rep. Oxley must move quickly if the House is to pass the bill before Congress adjourns Nov. 7. After the bill clears Rep. Oxley's panel, it must then be approved by the full Commerce Committee and GOP leaders before going to the floor.