WASHINGTON -- Citing calendar constraints and the press of other legislative business, the Clinton administration last week gave up efforts to merge the bank regulatory agencies this year.
"Here we are coming up to another recess, and we still don't have interstate branching and we still don't have CDFI," a senior administration official said Friday afternoon, referring to the Community Development Financial Institutions bill.
Those bills are the administration's two main priorities in the area of banking, and Congress is expected to resume work on both when it returns from the Memorial Day recess on June 8. The administration official said that the Treasury Department had made considerable progress in negotiations with the Federal Reserve, which had emerged as the most powerful opponent of the plan to merge all bank supervisory powers into a new Federal Banking Agency. "We made good progress, and I think we could have gotten there if we had a longer congressional session," the official said. This year's session will be cut short by elections. Treasury Under Secretary Frank Newman confirmed last Friday that the talks had broken off, but said they would resume next year.
"This is just a pause in the process," he said.
"One of the things we were very successful in doing is getting across to people the problems with the current system," he said.
In recent weeks, both Mr. Newman and Fed Governor John LaWare had said the two sides were very close to an agreement. Mr. Newman said two weeks ago that an announcement was likely within days.
It had been widely assumed that the deal under discussion would concentrate authority for most banks and thrifts in a new Federal Banking Agency, but give the Fed authority over a group of very large institutions.