WASHINGTON - In an effort to win back enough Republicans to pass a regulatory relief bill, House Banking Committee Chairman Jim Leach scaled back a provision restricting national bank insurance powers.

The 11th-hour effort was aimed in particular at Rep. Bill McCollum of Florida, a senior member of the Banking Committee who opposes the insurance restrictions.

Although the House leadership, including Speaker Newt Gingrich, supports the restrictions, the bill's proponents fear that Rep. McCollum could provide cover for more junior members of the panel who are wavering.

One congressional aide close to the process said the insurance language was modified to make it clear that Florida's Barnett Banks Inc. would be protected if it wins a court case challenging its right to operate an insurance agency. However, Rep. McCollum was reported to have been unpersuaded by the new language.

In addition, the Clinton administration strengthened Barnett's hand by telling a meeting of bankers that the Justice Department would intervene on the bank's behalf to ask the Supreme Court to hear the case.

One bank lawyer who attended the meeting with top Treasury officials, including Under Secretary John D. Hawke, said it was unusual for the Solicitor General to intervene in a case in which the government was not a party.

"This clearly shows that the administration is committing resources in case the legislation is unacceptable," this lawyer said.

A handful of Banking Committee Republicans, including Rep. Richard Baker, R-La., and Michael Castle, R-Del., have said they will not support the regulatory relief measure unless the insurance restrictions are scaled back.

With Democrats expected to vote against the regulatory relief measure en masse, Rep. Leach can afford to lose only one Republican.

The new insurance language, which Rep. Leach is expected to offer as an amendment to the reform bill, makes a number of changes and clarifications to language already contained in the legislation.

Under the Leach amendment, state insurance regulators would not be able to treat national banks, which are regulated by the Comptroller's office, less favorably than state-chartered ones. States would be able to regulate the manner in which but not the extent to which federally chartered banks sell insurance. And annuities sales by national banks would be more clearly protected.

"It's a marginal improvement, but it is still a provision that the American Bankers Association would strongly oppose," said ABA lobbyist Philip Corwin. "It still is exceedingly negative for the banking industry, because it still is a tremendous expansion of states' insurance authority over national banks."

While the changes were not enough to sway the ABA in favor of the bill, some bank lobbyists felt that they may have no choice but to accept the Leach amendment in the face of potentially more grievous measures.

One big-bank lobbyist said his institution will be happy with the new language, and warned that banks may get a worse alternative if they don't get behind the Leach bill now.

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