WASHINGTON - Facing opposition from many sides, Rep. Richard Baker is rethinking his legislation to repeal the Glass-Steagall Act.

"He is, by his own admission, crafting a very different proposal than the bill that has his name on it," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America, who met with the Louisiana Republican last Thursday.

But Rep. Baker's foes probably won't like his new ideas much better. According to his staff, Rep. Baker is considering limiting the amount of deposit insurance a bank can offer if it delivers risky products and services.

Both Rep. Baker and House Banking Committee Chairman Jim Leach have introduced bills to break down the barriers between investment and commercial banking. But while Rep. Baker would allow common ownership of insured banks and nonfinancial companies, Rep. Leach wants to maintain a strict separation between banking and commerce.

Rep. Leach as well as a groups like the IBAA are concerned that Rep. Baker's bill would lead to massive concentrations of financial power.

Mr. Guenther said Rep. Baker also may propose to ban the concept that some firms are "too big to fail," allowing taxpayer bailouts of companies to occur only through an act of Congress.

Rep. Baker met with Rep. Leach on Thursday afternoon to discuss his proposal with the chairman. According to legislative sources, Rep. Baker offered to end his push to combine banking and commerce if Rep. Leach would allow insurance companies to affiliate with banks. Rep. Leach allegedly turned down the deal.

Nonetheless, a staffer in Rep. Baker's office said, "He took the opportunity to throw out a few ideas and ask Mr. Leach to think about them, and he was happy with the results of the meeting."

The staffer added: "While there is nothing on paper, he really thinks this (varying deposit insurance coverage) needs to be considered."

Rep. Baker is contemplating "three tiers" of deposit insurance coverage.

The first tier would include banks focused on traditional activities such as taking in deposits and making loans. Their deposit insurance coverage would remain as it is today, with each deposit federally insured up to $100,000.

The second level being contemplated by Rep. Baker would limit deposit insurance coverage to $100,000 per social security number. This would cover banks that choose to conduct nontraditional, riskier financial activities. Rep. Baker's staff on Friday could not detail exactly what would be covered.

The third tier would create a "wholesale bank" that would carry no deposit insurance and would be barred from taking deposits less than $100,000. These banks would likely be able to affiliate with any sort of commercial entity.

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