Sen. Paul Sarbanes, D-Md., last week blocked a Senate vote on legislation that would make it easier for state-chartered banks to branch across state lines.
The Senate Banking Committee's ranking Democrat wants the panel to hold a hearing on the legislation, which the House passed May 21, according to industry sources.
The delay means that the bill cannot be enacted by the June 1 trigger date for final enactment of the Riegle-Neal interstate banking and branching law. Congress is in recess until June 2.
The law allowed national banks to maintain their full powers when branching interstate, but left unclear who controls the activities of state banks when they cross state lines.
The pending bill would allow state-chartered banks to use powers granted by their home states, even when they branch into other states. However, these activities would be limited to those permitted to national banks.
If the question isn't cleared up, many state banks will switch to national charters, said Ellen Lamb, spokeswoman for the Conference of State Bank Supervisors.
Senate Banking Committee Chairman Alfonse M. D'Amato has said he supports the bill. He has not decided whether to hold a hearing, according to a spokesman for the New York Republican.
The National Conference of State Legislatures and consumer groups oppose the legislation.
