Rep. Jim Leach is often compared to the Energizer Bunny; he just keeps going and going.
But after 17 months of struggle, the House Banking Committee chairman finally admitted defeat June 11, pulling the plug on his Glass-Steagall repeal bill.
The Iowa Republican introduced his Financial Services Competitiveness Act Jan. 5, 1995. He said his goal was to ensure the U.S. financial services industry "remained the most competitive, stable, and efficient in the world."
The first signs of trouble came just days after introduction, when a powerful group of industrial companies - each of which owned a thrift - complained that the legislation would force them to divest the financial institutions.
For its part, the banking industry opposed Rep. Leach's plan because it would have required any affiliations of banks and securities companies to come under a holding company regulated by the Federal Reserve.
Dissent within Rep. Leach's committee also surfaced quickly. Rep. Richard Baker, R-La., chairman of the banking panel's capital markets and securities subcommittee, announced he was preparing a rival bill that would let commercial companies buy banks.
This was the bill large banks had been waiting for, but Rep. Leach would have no part of it. He continues to believe a wall must remain between banking and commerce.
Though it wasn't clear then, the fate of Rep. Leach's plan was sealed Jan. 18, 1995, when the Supreme Court ruled that national banks could sell annuities. This "Valic" decision set the stage for more aggressive use of the Comptroller of the Currency's authority to grant powers "incidental" to banking, under the National Bank Act.
From then on, bankers bet on the comptroller and the Supreme Court, rather than Congress, to expand their powers.
In late March, Rep. Doug Bereuter, R-Neb., introduced a much-awaited regulatory relief bill to ease a host of consumer disclosure and community reinvestment rules.
Rep. Bereuter and the industry considered the bill a sure bet because it meshed with the new Republican majority's Contract with America. But the legislation would soon become a pawn in the battle over Glass-Steagall repeal.
The insurance industry, eager to block the comptroller's campaign to expand bank insurance powers, began complaining to House leaders about the "rogue regulator" trampling on state governments' turf. The insurers' solution: Rein in the Comptroller's Office.
Meanwhile, Rep. Leach realized his plan needed resuscitation if he were to keep the insurance agents at bay and counter the comptroller's moves. On April 5, he launched the first salvo in what would become an increasingly personal crusade against Comptroller Eugene A. Ludwig.
Rep. Leach blasted the comptroller for proposing rules that would let bank operating subsidiaries offer products prohibited to the parent company.
"There is not a shred of statutory support" for the so-called "op-sub" plan, Rep. Leach wrote in a letter to Mr. Ludwig.
That said, Rep. Leach brought to a vote before his committee a bill without restrictions on the agency. On May 11, the House Banking Committee approved the Glass-Steagall repeal bill, 29-8. It was an exhilarating moment for Rep. Leach.
His joy was short-lived. At the urging of the insurance lobby, the chairmen of the House Commerce and Rules committees vowed to slap restrictions on the regulator before letting the banking legislation go to the floor.
Last June 29, the banking panel approved Rep. Bereuter's regulatory relief package. Despite Rep. Leach's objections, this bill included an amendment allowing banks and insurance companies to affiliate.
Also, to placate pro-insurance Republicans, the panel agreed to bar the comptroller from expanding bank insurance powers.
But the ban didn't go far enough - the insurance industry wanted a rollback of some powers already given to banks. An ugly battle loomed between bank and insurance industry lobbies. Rep. Leach tried to work out a deal with Commerce Committee Chairman Thomas J. Bliley and Rules Committee Chairman Gerald Solomon, but to no avail.
Eager to get a bill to the floor but frightened of a likely internecine bloodbath, House Speaker Newt Gingrich stepped in July 10. After summoning Reps. Leach, Bliley, and Solomon to his office, the Georgia Republican decreed that the regulatory relief bill would incorporate the curb on the Comptroller's Office.
After a month of haggling over a final package, House Republican leaders announced Sept. 28 that Glass-Steagall repeal and the regulatory relief package would be combined.
The bill would include a five-year moratorium on the comptroller and a rollback of the agency's ruling that state law could not block national banks from selling insurance from small towns. Finally, Rep. Baker's amendment allowing bank-insurance affiliation was thrown out.
With the Glass-Steagall bill now clearly drawn, banking trade groups began squaring off. In mid-October, state affiliates of the American Bankers Association pushed the trade group to oppose the plan.
The Independent Bankers Association of America - eager to get regulatory relief - decided to back Rep. Leach.
The Bankers Roundtable and the Independent Insurance Agents became key players in Rep. Leach's trade group diplomacy in mid-November. For the next six months, the House Banking Committee staff repeatedly redrafted the bill, hoping to find the balance of insurance restrictions that both groups could support.
To many lobbyists and lawmakers, Glass-Steagall repeal had run aground and could not be refloated. But Rep. Leach refused to give up and made a string of desperate attempts.
*In December, he suggested a "jump ball" plan that would let the Supreme Court's ruling in the pending Barnett Banks case determine banks' ability to sell insurance from small towns. The moratorium on the comptroller would remain.
*Hoping to give something to everybody, Rep. Leach proposed a "megabill" March 22 that would repeal Glass-Steagall, provide regulatory relief, capitalize the thrift deposit insurance fund, and merge the bank and thrift charters.
*Four days later, the Supreme Court gave national banks a big victory in the Barnett case by confirming their right to sell insurance from small towns.
*With banks now poised to jump into the insurance industry, Rep. Leach offered March 28 to reintroduce Rep. Baker's affiliation amendment into his bill, prompting the IBAA to drop its support.
*April 25, Rep. Leach proposed to eliminate restrictions on the comptroller. But the Comptroller's Office argued that the proposed rewrite retained a de facto moratorium, and strong bank opposition persisted.
*May 22, after months of arduous negotiations, the Bankers Roundtable told Rep. Leach that the big-bank trade group would support his bill if restrictions on the comptroller were truly removed and if states were blocked from prohibiting bank and insurance company affiliations.
*With backing from a handful of big banks and the insurance agents, Rep. Leach told House leaders he was ready to take the bill to the floor.
But his hopes were quickly dashed. After months of being locked out of the Glass-Steagall talks, Democrats on the banking panel threatened to block the bill unless Rep. Leach held new hearings.
Skeptical that Rep. Leach had sufficient support, House leaders ordered the banking committee to revisit the legislation. The chairman dutifully scheduled a committee vote.
Day one of the hearings, June 6, proved uneventful but telling. Committee Democrats brought 74 amendments to the table, foreshadowing contention.
Minutes into the second day of hearings, Rep. Leach admitted defeat. But proving his tenacity, he announced he would tackle limited regulatory relief. Despite warnings from Rep. Solomon that any legislation must include prohibitions on the Comptroller's Office, Rep. Leach perseveres, insisting he can work out a deal.
* Rise and Fall of Glass-Steagall
Jan. 5, 1995
"Financial Services Competitiveness Act" is introduced.
Jan. 18, 1995
Supreme Court rules that national banks may sell annuities, setting the stage for more aggressive use of the comptroller's ability to expand bank powers.
May 11, 1995
House Banking Committee approves the Glass-Steagall repeal bill 29-8.
June 29, 1995
The committee approves a regulatory relief package that also would let banks and insurance companies affiliate.
July 10, 1995
House leaders demand the bill include limits on the comptroller's authority to expand bank insurance powers.
Sept. 28, 1995
Glass-Steagall repeal and regulatory relief are combined into one bill. The comptroller's moratorium remains.
March 26, 1996
Supreme Court gives national banks a big victory in the Barnett case by allowing them to sell insurance from small towns, diminishing the industry's desire for banking legislation.
March 28, 1996
Rep. Leach offers to amend his bill to include Rep. Baker's affiliation amendment, allowing banks and insurance companies to own each other. Small banks drop their support.
April 25, 1996
Rep. Leach proposes to eliminate restrictions on the comptroller, but the agency remains opposed as does much of the banking industry.
June 6, 1996
Rep. Leach cancels House Banking Committee's vote on the bill, proposes less ambitious legislation.