Action on Legislation Financial Modernization
The House Commerce Committee is expected to approve financial reform legislation today, teeing up a vote on the House floor before July 4.
The committee is likely to approve a bill closely resembling the version its finance subcommittee approved 26 to 1 on May 27. That version differs significantly from the bill passed by the House Banking Committee in March.
The subcommittee bill would bar direct subsidiaries of banks from all underwriting and merchant banking activities. It also would force banks to transfer some derivatives, private placement, and other securities activities to holding company affiliates. Commercial companies would be barred from buying grandfathered unitary thrifts. The so-called deference for federal regulators in legal fights with state insurance commissioners would be eliminated-except in a few cases.
A compromise on privacy was adopted that would require financial companies to establish detailed policies on the use of customer data and to disclose practices to consumers.
House Commerce Chairman Thomas J. Bliley Jr., R-Va., or an ally, is expected to try to delete a ban on the purchase of unitaries by commercial companies. Rep. Edward J. Markey, D-Mass., is expected to reintroduce tougher privacy protections.
The next stop for the bill will be the House Rules Committee, which will pick between, or blend, the Banking and Commerce committee bills. Bankruptcy
The Senate is expected to vote on bankruptcy reform by the end of June.
The Senate Judiciary Committee approved the bill, which is sponsored by Sen. Charles E. Grassley, R-Iowa, on a 14-to-4 vote April 27. It would let bankruptcy judges force debtors who could afford to repay either $15,000 or 25% of unsecured credit over five years to file under Chapter 13 of the bankruptcy code. Creditors also could ask judges to force a consumer into Chapter 13. The Senate bill is expected to include many consumer protections favored by the White House and opposed by lenders.
The House overwhelmingly approved its bill 313 to 108 on May 5. The House bill, sponsored by Rep. George W. Gekas, R-Pa., would require those with high disposable incomes to repay some unsecured debt in Chapter 13, rather than eliminating it all in Chapter 7. The bill relies on the Internal Revenue Service estimates of living expenses-bolstered with more funds for food, clothing, and education-to determine disposable income.
The White House has threatened to veto the House bill, but it passed with a veto-proof majority. Many of the administration's objections also apply to the Senate bill. Pending Legislation Regulatory Relief
Rep. Marge Roukema, the chairwoman of House Banking's financial institutions subcommittee, called for quick action on regulatory relief legislation at a hearing May 12.
Introduced by the New Jersey Republican on April 27, the bill would let banks earn interest on reserves held at the Federal Reserve. Also, banks and thrifts could pay interest on business checking starting Oct. 1, 2004; in the interim, the legislation would expand the number of withdrawals that commercial customers could make from money market deposit accounts to 24 per month from the current limit of six. Year-2000 Problem
The Senate Banking Committee on Feb. 11 approved a similar bill offered by Sens. Richard C. Shelby, R-Ala., and Connie Mack, R-Fla. However, the Senate bill would let banks and thrifts pay interest on business checking accounts starting Jan. 1, 2001.
It is unclear when either the full Senate or House Banking Committee will take up the bill.
The Senate was scheduled to resume debate Wednesday on legislation to curb frivolous year-2000 lawsuits.
Debate has stalled twice since late April because of partisan disagreements over the details and unrelated issues. The bill is sponsored by Sens. John McCain, R-Ariz., and Ron Wyden, D-Ore.
The House approved its version by a 236-to-190 vote on May 12.
Though they differ in some ways, both bills would limit punitive damages, give potential defendants the chance to "cure" problems they caused, and encourage litigants to resolve their differences outside the courtroom. The Clinton administration has threatened to veto both versions. New Legislation Privacy
Rep. Jay Inslee, D-Wash., on May 25 introduced the Banking Privacy Act of 1999. Banks would have to disclose to customers how their data would be used before sharing it with affiliates or third parties, and they would have to give consumers the right to bar any transfers, or "opt out," within 30 days of that notice.