Lawmakers are vowing to approve financial reform legislation in early 1998, but administration and industry sources are skeptical.

"We remain committed to completing our work and putting this legislation on the House floor early next year," said Rep. John Boehner, the Republican leaders' point man on the bill.

Given Congress' 1998 schedule, however, a vote is unlikely until April or May, said Treasury Under Secretary John D. Hawke Jr.

That would leave the Senate with little time to act before Congress recesses for the mid-term elections. "There is a real danger that we will run out of time," Mr. Hawke said.

Others were even less optimistic. "This is the equivalent of the Chicago Bears printing Super Bowl tickets," said a banking industry lobbyist who did not want to be identified.

Lawmakers had been struggling to get a compromise to the floor of the House of Representatives before Congress adjourned for the year, but talks collapsed Saturday. Congress is expected to adjourn this week.

To prevent regulators from adding any new bank powers, Rep. Marge Roukema, R-N.J., said the House Banking Committee ought to ask the agencies to hold off. "They have got to understand that we ultimately will be writing this legislation," she said in an interview Monday.

But her idea did not appear to have much support. House Banking Committee Chairman Jim Leach and Rep. Bruce Vento, D-Minn., both opposed it.

House Banking approved its financial modernization bill in June, and the Commerce Committee adopted its version in October. Both bills would allow the merger of the banking, insurance, and securities industries, but the Commerce version would prevent federal regulators from preempting state insurance regulations and would restrict the Federal Reserve's authority to supervise nonbank subsidiaries of holding companies.

Representatives of the industries affected said they were glad the bill had failed.

"There just was not time to put together a package that would have a consensus behind it," said Edward L. Yingling, deputy executive vice president of the American Bankers Association.

"In the waning minutes of a congressional session where people are tired, it can be better to take a time out," agreed Philmore Anderson, assistant vice president for federal affairs at the American Council of Life Insurers.

For a bill to pass, Rep. Roukema said, the Republican leadership must insist on a vote early in the year. "Without the leadership we are not going to build on the progress we have already made," she said.

"It is not going to happen unless someone like Rep. Dick Armey or House Speaker Newt Gingrich decides they want it to happen," another bank lobbyist agreed. "They need to start knocking heads. If they won't, then let's just save everyone the time and effort and move on to something else."

But Mr. Anderson said he expects Congress to follow through. "A lot of people have invested a lot of time in this and have created an ownership in getting it done," he said.

Separately, the Senate approved legislation Sunday that would require lenders to cancel private mortgage insurance automatically when a borrower's equity in a home reaches 22%. The House passed legislation in April that set the trigger at 25%. The next step: a House-Senate conference committee compromise.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.