WASHINGTON - House Banking Committee Chairman Jim Leach said Thursday that he favors stripping the controversial freeze on bank insurance powers from legislation that would the Glass-Steagall Act and eliminate a number of regulatory burdens.
"I maintain a strong commitment to bringing a bill out this fall," Rep. Leach said in an interview with American Banker on Thursday.
However, the five-year moratorium on the Comptroller of the Currency's ability to expand bank insurance powers is not dead. In an interview, Rep. Leach said he plans to tie it to a separate, as-yet unidentified bill that is less likely to get a veto from President Clinton.
The Iowa Republican has never supported the insurance ban, inserting it in his legislation reluctantly after House GOP leaders such as Speaker Newt Gingrich demanded it.
Asked whether he would vote for the moratorium if it were a part of some other bill, Rep. Leach sidestepped the question: "If we did it that way, I would be obligated to give it a fair chance."
While stripping the insurance limits from Glass-Steagall is his preferred route, Rep. Leach also outlined two other possibilities. The Glass-Steagall bill - including the insurance ban - could be attached to the budget reconciliation package when it returns to the House from an expected presidential veto. Congress is expected to wrap up work on the budget bill today.
Rep. Leach's third option is to proceed with the current bill, which includes Glass-Steagall repeal, regulatory relief, and the insurance ban. Rep. Leach gave this package "some chance of passage. It would be a close call."
Rep. Leach met with Rep. Gingrich Wednesday night to discuss the legislation. Rep. Leach said the Speaker has no preference on which of the three options is pursued.
Rep. Gingrich did nix Rep. Leach's plans to require Fannie Mae and Freddie Mac to foot the bill for bailing out the Savings Association Insurance Fund.
Rep. Leach last week suggested the secondary market agencies should pay $800 million in interest due each year through 2017 on bonds floated by the Financing Corp. to shore up the thrift fund.
With that plan dead, the only other alternative is legislation sticking the banking industry with 75% of the annual Fico tab. Thrifts would pay 25%.
While the industry has fought for more than a decade to break down the barriers to investment banking, many bankers decided the price - the five- year ban on new insurance powers - was too high.
While Rep. Leach is optimistic about Glass-Steagall's chances, industry and Clinton administration sources read the legislation's prospects much differently.
"We are told by the leadership they consider this bill to be highly controversial," said Edward L. Yingling, chief lobbyist for the American Bankers Association. "What they don't want to have is a fight that splits Republicans on an issue they consider a lower priority than the budget battle."
"Having nothing is better than having something that is really anti- competitive and anti-consumer," Treasury Under Secretary John D. Hawke Jr. said in an interview Thursday. "I think we're going to end up with nothing."