Rep. Jim Leach criticized a group of big banks for locking themselves into an "impractical" position on insurance powers and said he's ready to move his Glass-Steagall bill without their consent.
The House Banking Committee chairman appears to have lost patience with the negotiations that his staff has been conducting with the Bankers Roundtable and a variety of insurance interests. His latest comments could increase pressure on the Roundtable to compromise with the insurance industry.
"Clearly, Leach is saying that some institutions are asking for everything, and legislation just doesn't work that way," said Kenneth Guenther, executive vice president of the Independent Bankers Association of America.
Alfred M. Pollard, the Roundtable's legislative director, said his group takes Rep. Leach's warning seriously, but argued that his members must protect their interests. "The pressure I feel is the pressure that's been there all along. We're trying to come up with something that will work. We made a commitment to produce something that our members will support," he said.
Rep. Leach did not identify the banks he believes have taken an impractical position, but a group of institutions - including Florida's Barnett Banks Inc. and Ohio's Banc One Corp. - have been pressing for protection from state insurance regulators. The industry also opposes a provision that would set a moratorium on new insurance powers for national banks.
In a Dec. 28 letter to the Roundtable's head, Chase Manhattan Corp. chairman Thomas G. Labrecque, Rep. Leach said that the remaining disagreements may be impossible to reconcile and that there is "no advantage in lengthy further delay."
Rep. Leach said he will ask House Speaker Newt Gingrich to allow the Glass-Steagall bill to come the floor for a vote as soon as Congress and the White House resolve their budget dispute. While he did not indicate how soon that vote might be, other sources said Congress would not take up the bill before President Clinton's State of the Union address on Jan. 23, even if the budget is settled in the next two weeks.
Rep. Leach must also persuade House leaders to schedule a vote that could explode into a messy fight. In recent months Speaker Gingrich has opposed the vote because it would force Republicans to choose between the banking and insurance industries.
American Bankers Association lobbyist Philip S. Corwin said House leaders recently reiterated their unwillingness to bring the bill to the floor as long as the industries are divided. The ABA opposes the Glass- Steagall bill because of the insurance restrictions.
One insurance lobbyist, however, said House leaders may change their minds. "Privately some are saying maybe it's time to bring this bill to the floor and let the chips fall where they may," said Robert A. Rusbuldt, lobbyist for the Independent Insurance Agents of America.
Mr. Rusbuldt, a lobbyist with strong Republican ties, may have a better read than some bank lobbyists on the mood of the House leadership. His close relationship with Speaker Gingrich helped secure the insurance restrictions in the first place.
Taking note of the insurance industry's political power, Rep. Leach warned that banks may find the same restrictions attached to another bill or even offered as stand-alone legislation. Consequently, he said, banks will get the best deal by reaching a compromise with his help.
"It strikes me as somewhat ironic that the banking industry is willing to jeopardize a bill it generally favors," when the portions it opposes are likely to be considered separately by "less friendly" legislators, he said in an Dec. 22 letter to Mr. Labrecque.