House Republican leaders are pressing for a vote next week on financial reform, but controversy about the bill's privacy limits could delay action until after the Fourth of July recess.
To hasten a compromise on the sticky issue of privacy, Rules Committee Chairman David Dreier has tapped Reps. Martin Frost, D-Tex., and Deborah Pryce, R-Ohio, to spearhead a bipartisan deal. Reps. Frost and Pryce are sorting through ideas, a House staffer said.
Speaker J. Dennis Hastert has asked Banking Committee Chairman Jim Leach and Commerce Committee Chairman Thomas J. Bliley Jr. to quickly finish blending their reform bills. The proposals differ widely on consumer privacy protections, powers for direct bank subsidiaries, and other key matters.
Staff members of the Banking and Commerce committees entered their fourth day of negotiations on Wednesday and plan to have a merged bill ready by Friday, a Banking spokesman said.
The outcome of these talks remains murky, but sources generally predicted that the merged legislation would keep the Banking Committee bill's broader powers for bank subsidiaries and softer limits on bank sales of insurance. But it would likely preserve some of the Commerce Committee bill's tougher limits on securities activities by banks.
Amendments are expected on the House floor on whether to scale back bank subsidiary powers or prohibit commercial companies from buying unitary thrifts.
Rep. Hastert has made it clear that he wants a vote on financial reform by July 4. "He's hell-bent on it, and it's do-able," a leadership source said.
But others are convinced that privacy is too complex and divisive and that the leadership will instead wait for a consensus. Many lawmakers want to avoid repeating last year's tough reform vote, which pitted lawmakers against industry groups.
"Privacy as an issue has become integral to financial services modernization legislation," said Bert Ely, a financial services consultant in Alexandria, Va. "It is going to slow things down while people are sorting this issue out. They need to chew on it more."
House Minority Leader Richard A. Gephardt and some fellow party members are scheduled to hold a lunch meeting Thursday with industry officials, who want to gauge the views of rank-and-file Democrats on privacy and other matters.
Lobbyists from the banking, insurance, and securities industries huddled Wednesday at the headquarters of the American Bankers Association to coordinate their strategy on privacy.
The White House and Rep. Edward J. Markey, D-Mass., favor the Commerce Committee's requirement that financial companies let customers block information shared with affiliates and third parties.
But financial companies have not given up on a compromise offer that would let customers block data transfers to third parties while permitting holding companies to share information freely among affiliates.
New limits on information sharing among affiliates are "a nonstarter," said Joe Belew, president of the Consumer Bankers Association. "We will not go there."
Rep. Marge Roukema, chairman of House Banking's financial institutions subcommittee, said Wednesday that she would prefer the Banking bill's mandatory disclosure of privacy policies and ban on sharing medical information without customer permission. More hearings should be held before going further, she said.