WASHINGTON - The logjam that stymied regulatory relief legislation this summer is breaking up - but for larger banks eyeing new insurance powers, the price of progress is high.

The legislation, packed with reforms designed to save banks time and money, has been held up for months by insurance agents who opposed a controversial amendment to allow banks and insurance companies to affiliate in most states.

However, key House Republicans are expected to drop the amendment, which was sponsored by Rep. Richard Baker, today.

House Banking Committee Chairman Jim Leach, R-Iowa, and House Rules Committee Chairman Gerald Solomon, R-N.Y., also are expected to propose a five-year freeze on the authority of the Office of the Comptroller of the Currency to expand national banks' insurance powers. Rep. Leach had been proposing an indefinite moratorium on the agency's authority over insurance products.

The revised legislation could come to the House floor for a vote early next month. Reps. Leach and Solomon started hammering out their deal on Friday, and continued negotiations in a meeting Tuesday afternoon.

The final deal, expected to be presented to House leaders today, is a huge victory for the agents.

"If we can eliminate the Baker amendment and the price to pay is sunset on the Comptroller's moratorium, than we can definitely live with that," said Robert A. Rusbuldt, lobbyist for the Independent Insurance Agents of America.

"We don't like sunset, but life is a bunch of tradeoffs."

Removing Rep. Baker's affiliations amendment could swing some crucial support behind the bill, according to Karen Shaw Petrou, president of ISD/Shaw Inc.

"Once you take the Baker amendment out, you'd have the Independent Bankers Association of America and the insurance industry behind it," said Ms. Petrou, whose firm tracks bank legislation and regulation. "The chances for passage of the package would be fairly good."

Still, IBAA executive vice president Kenneth A. Guenther declined to comment until he sees the final proposal.

The American Bankers Association is expected to oppose the package. While lobbyists at the ABA were away from the office Tuesday and could not be reached, the group has adamantly opposed restricting the Comptroller's authority.

"The Comptroller's moratorium, even with a sunset, still outweighs the positives in the bills," one bank lobbyist said Tuesday. "Five years is still a long, long time, and it could be extended, for all we know."

The proposal to drop the affiliations amendment did not sit well with Rep. Baker. The Louisiana Republican plans to fight attempts to drop his provision, according to an aide.

"He will go to the mat to see that affiliations are still included," said the staffer. "The leadership shouldn't be imposing itself like this after the House Banking Committee worked its will and adopted the Baker amendment."

The regulatory relief bill would streamline compliance with a number of laws, including the Community Reinvestment Act, Truth-in-Lending, and Truth-in-Savings.

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