Rep. Jim Leach's new banking reform plan appears doomed -just two days after the House Banking Committee chairman unveiled it.
The problem: Rep. Gerald Solomon, who runs the powerful House Rules Committee, is insisting the new plan include a 10-month moratorium on the Comptroller of the Currency's ability to give banks new insurance powers.
Calling Comptroller Eugene Ludwig a "rogue Clinton administration regulator," Rep. Solomon told Rep. Leach in a letter this week that the new banking bill must include restrictions on the regulator.
Replying, Rep. Leach told the New York Republican this demand "would cause a blow-up of the legislation."
Once again, banking legislation is at a stalemate.
Banking industry opposition to insurance restrictions is what forced Rep. Leach to abandon efforts Tuesday to pass his broader financial modernization bill.
"We appear to be running into the same bank-insurance lobbying standoff that killed the earlier Leach bill," said Kenneth Guenther, executive vice president of the Independent Bankers Association of America.
"I don't see how this bill can go forward," said a Democratic congressional staff member. "Leach's only hope was for the leadership to tell the insurance agents they've done enough damage."
But Republican leaders won't step in and settle things between the two lawmakers, said an aide to House Majority Leader Richard Armey. "It's being left to Leach and Solomon to work out differences."
Rep. Solomon, however, a staunch insurance industry supporter, isn't likely to back down. Both the American Council of Life Insurance and the Independent Insurance Agents of America will oppose the new plan if a moratorium isn't included.
Determined as ever to move a banking reform bill, Rep. Leach isn't giving up. His staff talked with Rep. Solomon Thursday about a deal.
The legislation abandoned Tuesday would have let banks affiliate with securities or insurance companies. Rep. Leach is now pursuing a more limited regulatory relief bill that also would give the Federal Reserve more latitude to define holding company powers.
Bank industry lobbyists are holding out hope that House GOP leaders will insist on a regulatory relief bill without restrictions on the comptroller.
"Certainly Solomon's letter hurts the bill's chances," said Edward L. Yingling, chief lobbyist for the American Bankers Association. "But we hope in the end Republicans would see this as an opportunity to pass a good bill that helps fulfill the Contract with America."