It's the Dingell Bill Now, and Bankers Hate It
For most of the year, the banking industry's big fear was that Rep. John D. Dingell might kill the Bush administration's reform bill. Now, they are more afraid he may let it live.
Industry lobbyists had long assumed that Rep. Dingell, chairman of the House Energy and Commerce Committee, would angle to kill provisions granting new powers to banks.
Instead, they now say, it appears the Michigan Democrat likes the chances for broad legislation that would curb the limited securities and insurance powers banks already enjoy.
Two subcommittees of Rep. Dingell's committee finished work Monday on such a version of the banking bill, which industry lobbyists regard as little short of a disaster.
The bill would repeal the Glass-Steagall Act but impose such tough restrictions as to make it impossible for banks to underwrite securities. Moreover, it would close a legal loophole that gave banks limited access to securities powers.
The legislation would also restrict the ability of national banks to sell insurance in towns with fewer than 5,000 people, and it would limit state-chartered banks to the same powers as national banks.
Samuel Baptista, president of the Financial Services Council, thinks momentum is growing for a bill that would "take the industry back" in time.
"It is clear to me that Dingell wants this bill," added Doyle Bartlett of the Conference of State Bank Supervisors. "And the whole dynamic of the process changes if he wants a bill."
A Strengthened Hand
The stars are lining up in Rep. Dingell's favor, some observers think. A rash of bank failures, scandals such as the one surrounding the Bank of Credit and Commerce International, and the need to appropriate billions of dollars for the thrift bailout and the Bank Insurance Fund have strengthened his hand.
Moreover, a number of interest groups such as the Independent Insurance Agents of America have pressed hard for his committee's version of reform, hoping to roll back bank powers.
As a result, industry lobbyists question whether the Bush administration can follow through on its threat to block a bill that curbs bank powers.