WASHINGTON -- Rep. Jim Leach, in line to lead the House Banking Committee next year, said Friday he favors lowering deposit insurance premiums once the Bank Insurance Fund is rebuilt.
"Once you reach the $30 billion limit, in theory you can lower deposit insurance premiums virtually to nothing," the Iowa Republican said. "So we're at a point where we can visualize dropping from the 23 cents down very rapidly."
Rep. Leach's position gives the banking industry an important ally if the fight with thrills over lowering insurance rates hits Capitol Hill next year.
In one of his first public engagements since Republicans won control of Congress, Rep. Leach also noted his interest in bank securities powers, derivatives supervision, and the independence of the Federal Reserve Board.
During a speech before the Washington Research Group here, Rep. Leach said the committee is likely to take a look at modifying the Glass-Steagall Act -- the wall separating commercial and investment banking.
Congress ought to recognize the breaks in that wall already hammered out by the market. He likened this position to the way Congress dealt with interstate branching -- codifying changes the industry had already started.
"There have been changes that have occurred in the landscape based upon Federal Reserve policy, so in effect it will become Congress recognizing these changes rather than Congress precipitating all the changes itself," Rep. Leach said. "It is my view that the time is ripe for ending some of the divisions between investments and commercial banking."
Rep. Leach also vowed to pursue legislation tightening regulation of derivatives. "There is a role for government," Rep. Leach said. "There are some things private market participants can't do for themselves."
Rep. Leach is likely to take the same broad legislative tack as a bill he introduced this year, the Derivatives Safety and Soundness Supervision Act, which would have directed regulators to establish guidelines for oversight of derivatives activities.
Rep. Leach also insisted that bank regulation be kept independent from politics, which means a strong role for the Fed.
"It is my very strong desire to keep a very powerful role for the Federal Reserve Board in bank regulation, not only in recognition of the professionalism of the Fed, but out of a very strong personal desire to keep politics out of bank regulation," he said.
Rep. Leach does not view Whitewater hearings as an agenda topper, as does expected Senate Banking Committee Chairman Alfonse D'Amato. Instead, Rep. Leach said that he may wait to see what results come from independent counsel Kenneth Starr's investigation.
"The main issue involved in Whitewater is full disclosure and proper accountability," he said. "I feel very strongly that this is an issue that should be approached cautiously and carefully. There will be no rush to judgment, and I will do my best to ensure that there is no mean-spiritedness."
Sen. D'Amato said last Thursday that he may start Whitewater hearings at the end of January or in early February. The New York Republican said that the hearings will be "thorough and responsible."