The House-Senate conference committee negotiating the financial reform bill rejected two amendments Monday that would have expanded consumer protections on bank sales of insurance.

One amendment, sponsored by Reps. Spencer Bachus, R-Ala., and Bill McCollum, R-Fla., would have let state consumer protection laws apply to title insurance sold by national banks or their subsidiaries. House conferees approved the provision by voice vote, but their Senate counterparts defeated it, 9 to 8.

"It's a big victory for us," said American Bankers Association lobbyist Edward Yingling. He said the amendment would have inexplicably carved out title insurance for separate treatment from other types of insurance. The ABA's position was strongly echoed by Senate Banking Committee Chairman Phil Gramm during the deliberations.

A second amendment, sponsored by Rep. John J. LaFalce, D-N.Y., would have affected all types of insurance sold by banks. The provision, defeated 16 to 12 by House conferees, would have required states to offer a minimum, uniform level of protection to people buying insurance from banks. The bill currently would let states reduce their consumer protections after three years.

Both amendments inspired spirited and sometimes heated debate during the third day of deliberations on the bill, which is a blended version of legislation approved by the House and Senate this year.

In support of his own amendment, Rep. LaFalce said he feared a "race to the bottom" if states were not required to maintain a minimum level of consumer protection for bank insurance sales. Rep. Barney Frank, D-Mass., scolded Sen. Gramm for saying that the amendment violated states' rights, claiming the Texas Republican favors whichever level of government offers the least resistance to industry on a given issue.

"I think the amendment is a very sensible one," Rep. Frank said.

The heat generated by these early votes was expected to be outdone Monday evening when lawmakers turned to privacy and the Community Reinvestment Act.

For an update on the committee's progress, check our Web site at

At press time, the conference committee's staff continued to insist that work on the legislation would be wrapped up Monday night, in time for votes on the Senate and House floors this week.

Meanwhile, the regulator of the Federal Home Loan banks told lawmakers Monday that he would scrap plans to overhaul the system if the financial modernization bill is enacted. Either the legislation or a pending proposal by the Federal Housing Finance Board would change the Home Loan banks' capital structure, though the two differ in detail.

In a letter to Sen. Gramm and House Banking Committee Chairman Jim Leach, finance board Chairman Bruce A. Morrison said the agency would withdraw its proposal to revamp the capital structure and investment management of the 12 Home Loan banks in the face of any new law.

Katharine Fraser contributed to this story.

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