Action on Legislation Financial Modernization
The House voted 343 to 86 for financial reform legislation on July 1. A similar bill passed the Senate on May 6 on a 54-to-44 vote.
A conference committee of congressmen and senators-led by Senate Banking Committee Chairman Phil Gramm and House Banking Committee Chairman Jim Leach-is expected to be appointed next week to reconcile differences between the two bills.
Both bills would let banks, securities firms, and insurance companies buy each other.
The House bill has broader support both among industry lobbyists and the Clinton administration. The White House has threatened to veto the Senate bill, claiming it would weaken the Community Reinvestment Act. The Senate bill would exempt banks with less than $100 million of assets from CRA compliance.
President Clinton has also objected to the Senate bill because it would give the Federal Reserve Board more authority over financial companies. The House bill more evenly splits oversight between the Fed and the Treasury Department.
A compromise must also be reached on consumer privacy. While the Senate bill simply requires financial companies to disclose their privacy policies, the House bill would give customers a chance to block their banks from sharing personal information with third-party marketing companies.
Both bills would bar commercial firms from chartering thrifts. However, under the House bill, commercial companies could buy an existing thrift if the Office of Thrift Supervision and the Federal Reserve Board approved. Year-2000 Problem
Lawmakers on July 1 approved legislation to curb frivolous year-2000 lawsuits.
The votes-404 to 24 in the House, 81 to 18 in the Senate-came after a week of negotiations between Capitol Hill and the White House. The compromise bill provides fewer protections from litigation than either Sen. John McCain or Rep. Thomas M. Davis 3d sought in their original bills, but concessions were necessary to get President Clinton and many Democrats on board.
The bill would give companies up to 90 days to fix a year-2000 problem before an injured party could sue. It would also cap punitive damages for small businesses, steer large class actions into federal court, and encourage mediation and other alternatives to litigation.
The bill includes a provision that would give a homeowner with year-2000 problems a one-month reprieve from foreclosure, provided the homeowner notified his servicer in writing. Pending Legislation Bankruptcy
Bankruptcy reform legislation has stalled in the Senate. On July 6, Sens. Charles E. Grassley, R-Iowa, and Robert Torricelli, D-N.J., asked Republican and Democratic leaders to schedule a vote before Congress recesses on Aug. 6 for a month.
The Senate Judiciary Committee approved the bill 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. New Legislation Privacy
Sen. Charles E. Schumer, D-N.Y., introduced the Financial Information Protection Act on June 9.
S 1195 would require financial institutions to give customers notice and choice about how their personally identifiable sensitive financial information is shared or sold.
The bill would bar financial companies from sharing customer information with third parties unless customers are given written notification and provide either written or electronic consent.
The disclosures would have to explain what specific information is being shared or sold and for what purpose. The parties receiving the data would have to be identified. Financial institutions would also have to give customers a chance to see the data and correct any errors.
The bill would give the banking agencies and the Securities and Exchange Commission 14 months to implement rules carrying out the law.