House Banking Committee Chairman Jim Leach said the banking industry is demanding too many changes to his Glass-Steagall reform bill.
Rep. Leach, responding to the Bankers Roundtable's qualified support for his legislation, said the group will have to accept restrictions on the power of the Comptroller's Office to expand insurance powers.
"Part, but probably not all, or your concerns can reasonably be addressed," Rep. Leach wrote in a letter to Roundtable president Roger L. Fitzsimonds. The Iowa Republican has agreed to the other Roundtable demand - allowing banks to own uninsured wholesale financial institutions.
But Mr. Fitzsimonds told Rep. Leach on May 22 that the group could not support his bill if it contained any curbs on the comptroller's authority.
Rep. Leach countered that some restrictions on the agency must remain in his bill or insurance industry groups will block the legislation.
"There are, of course, other parties whose views must be taken into consideration," Mr. Leach wrote.
As he's done in the past, Rep. Leach played down the hurdles his bill must clear. The Roundtable's request, Rep. Leach said, is "a relatively minor" concern that should not be a "central stumbling block" to bringing the bill to a vote on the House floor.
Despite Rep. Leach's optimistic prediction, he has yet to broker a deal that will free his bill from the legislative logjam, sources said.
"I think your going to hear another round of howls on this because these changes aren't minor," said Bert Ely, president of Ely & Co. in Alexandria, Va.
Already, the insurance industry is crying foul.
Gary Hughes, general counsel for the American Council of Life Insurance, warned Friday that his group would fight the bill if Rep. Leach accepted the Roundtable's demands.
If restrictions aren't placed on the Comptroller's Office, bankers will face "years of bitter litigation" over entries into the insurance business, Mr. Hughes warned.
Still, the Roundtable's director of legislative affairs, Alfred Pollard, said Friday that he's confident Rep. Leach can satisfy his group's demands without provoking insurance industry opposition.
"We were very serious in what we said, but I'm hopeful we can work through this,' he said.
The insurance industry has strong allies within the House leadership, who last summer insisted that restrictions on the Comptroller's Office be included in the Glass-Steagall repeal bill.