Rebuting critics, Rep. Jim Leach said the fragile compromise to rescue the thrift insurance fund will be strengthened by his plan to expand bank powers.
In an interview here, the House Banking Committee chairman strongly disagreed with industry sources who have said support for the compromise could crumble if the bill is weighed down with extraneous provisions.
"I believe there's a common consensus to give banks some modernization tools," Rep. Leach said on the floor of the GOP convention.
Rep. Leach said his add-ons - allowing bank holding companies and securities firms to establish wholesale uninsured financial institutions and expanding the merchant banking powers of some bank holding companies - will strengthen support within the two industries.
"I am trying to build as much support for this plan as possible," said the Iowa lawmaker.
If both banks and securities firms back his bill, Rep. Leach said support will be broad enough to fend off efforts by the insurance lobby to add restrictions limiting the Comptroller of the Currency's ability to grant new powers to national banks.
"The insurance industry will oppose anything without restrictions on the OCC," said Rep. Leach. "But I have attempted to craft a bill that doesn't harm them in any way."
Nevertheless, wholesale banks, or "woofies," remain highly controversial with Democrats on the Banking Committee, and the Independent Bankers Association of America has opposed letting banks establish the institutions.
Rep. Leach's bill also would allow bank holding companies with section 20 securities affiliates to expand their merchant banking business. In merchant banking, underwriters of securities hold a stake in the companies they take public.
By shoring up the thrift fund and cutting industry red tape, Congress will finally be free to concentrate on crafting a common charter for banks and thrifts and on repealing the Glass-Steagall Act's prohibitions on securities underwriting by banks, Rep. Leach said.
Efforts to capitalize the Savings Association Insurance Fund have been stymied for a year because banks opposed plans to make them pay most of the $800 million annual tab for long-term bonds used to bail out the thrift industry in the late 1980s. A compromise passed by the House Banking Committee in July would make thrifts responsible for the bulk of the bond payments until 2000. The American Bankers Association has endorsed the rescue.
Rep. Leach ventured far beyond banking this week.
While fellow House Banking members J.C. Watts and Bill McCollum were promoting the conservative platform, Rep. Leach was busy reminding delegates that not all Republicans hold hard-line views on social issues.
As chairman of Republicans in the Mainstream, Rep. Leach gave several speeches promoting moderate positions. On Tuesday, he expressed alarm that the Republican platform calls for abolishing the Education Department.
At a breakfast sponsored by the National Education Association, Rep. Leach warned that voters, even most Republicans, support a federal role in education. "I think any political party that toys with the idea of backing away from federal support for education does so at its own peril," he said.
While the Mainstream group finds much to challenge in the GOP platform's social and international affairs sections, Rep. Leach said the organization is solidly behind the Dole-Kemp ticket and supports its low-tax, high- growth economic agenda.
"With Dole's economic plan, you can restrain federal spending and reduce the deficit," he said.
