WASHINGTON - The Independent Bankers Association of America will support, though grudgingly, the Glass-Steagall regulatory-relief package developed by House Banking Committee Chairman Jim Leach.
The IBAA's endorsement signals that the Iowa Republican has gained some industry support in his effort to pass the broad banking package, which is tentatively scheduled for a vote on the House floor Oct. 17.
The American Bankers Association, the country's largest banking group, has not taken a position on the legislation.
A last-minute appeal over the weekend by Rep. Leach helped sway the IBAA board members, who voted unanimously to support the bill.
IBAA executive vice president Kenneth Guenther said that member banks were not looking closely enough at the provisions they had been opposing. For one thing, he said, the banking industry must be able to compete with securities firms. In addition, he said the Leach legislation would lighten banks' regulatory load.
Still, Mr. Guenther said any new unfavorable provisions could threaten IBAA's support.
"If the bill is further weakened," he said, the group "critically review" its position.
The IBAA was leaning against the legislation last month when Rep. Leach eliminated an exemption from the Community Reinvestment Act for small banks. The group also opposes a five-year moratorium on the Office of the Comptroller of the Currency's ability to grant new insurance powers.
Through a telephone hook-up, Rep. Leach told IBAA members that the power to sell securities is crucial because traditional bank revenue sources are hampered by competition and declining profit margins.
"Community banks could, in short order, become anachronistic, unless they are allowed to offer the full range of products their customers desire," he said.
The ability to underwrite broad classes of securities and sell other investment products will better position banks to combat securities firms.
"Without Glass-Steagall reform, the securities industry will continue - unanswered by the banking industry - its expansion in traditional bank activities," the lawmaker said.
Rep. Leach tried to ease bankers' frustrations, saying the actual wording of the so-called "Comptroller's moratorium" is less onerous than bankers had feared.
The provisions, he said, would eliminate the agency's ability to authorize insurance activities "incidental" to banking, but would let it approve insurance activities that are "part of" banking. The distinction, he said, does not deserve "hullabaloo opposition."
Additionally, Rep. Leach said the moratorium language for the first time sanctioned court decisions allowing banks to sell annuities.