Sen. Riegle Concedes Key Points on Reform Bill
WASHINGTON - Sen. Donald W. Riegle offered several key concessions on Wednesday that brought the Senate's banking reform bill closer into line with Bush administration proposals.
Sen. Riegle, chairman of the Senate Banking Committee, agreed to loosen restrictions he had sought on banks' underwriting of securities and to give the industry more time than he previously sought to rebuild the Bank Insurance Fund.
The Michigan Democrat did not go so far as to endorse the administration's position on allowing affiliations between banks and nonfinancial corporations. But the bill he unveiled at the start of the committee's markup session reflected compromises that were likely to smooth - though not necessarily speed - the bill's progress to the Senate floor.
Even though Sen. Riegle's draft was based on an extensive give-and-take Tuesday and Wednesday with Jake Garn of Utah, the panel's ranking Republican, several committee members said they were concerned about the voluminous bill's being speeded through the committee without adequate debate.
Sen. Riegle said an unidentified Republican threatened a procedural maneuver that could have delayed the banking committee's consideration indefinitely. But after consulting with the Senate parliamentarian, Sen. Riegle proceeded with the markup, citing time pressure.
Congress is due to leave on Friday for its August recess and has only 11 legislative days scheduled in September. He quoted from a letter from L. William Seidman, chairman of the Federal Deposit Insurance Corp., saying "it would be imprudent and unwise for the Congress to go beyond October, without a recapitalization plan in place" for the Bank Insurance Fund.
Some Lawmakers Urge Delay
Still, some committee members urged Sen. Riegle to postpone work until September, in part because of the possibility that an objection could be filed on the Senate floor, but also to give lawmakers more time to study the complex measure.
"We are not talking about something that will affect us for only 30 days," said Sen. Alfonse M. D'Amato, R-N.Y. "Once we go down this road, it will be irretrievable."
The compromise reached by Mr. Riegle and Mr. Garn was made part of the bill without a vote.
However, specific sections of the broad proposal still might be challenged by other Senators.
Sen. Phil Gramm, R-Tex., is expected to offer an amendment that would permit nonfinancial companies to buy failing banks.
Sen. Garn had agreed earlier not to raise the issue, because Sen. Riegle was admamantly against it and the impasse threatened to delay Senate Banking Committee consideration of the complete legislation.
Although the Bush administration would back the Gramm proposal, it faces an uphill battle without the support of Sen. Garn.
In addition to permitting broad securities underwriting powers, the compromise draft unveiled Wednesday would also:
* Give the industry up to 15 years instead of 10 years, depending on economic conditions, to bring the Bank Insurance Fund's reserve up to 1.25% of insured deposits.
* Let banks branch across state lines through acquisitions after June 1, 1993, and engage in full interstate branching five years after the bill is signed into law. States could choose to "opt out" of the interstate arrangements.
* Relax the qualified thrift lender test.
* Not require foreign banks operating branches in the United States to form a U.S.-based bank if they want to exercise the full range of securities powers proposed in the bill.
* Modify a provision of Mr. Riegle's that would have required annual examinations of FDIC-insured institutions. Well-capitalized banks with assets of less than $100 million could go 18 months between exams.
* Allow the secretary of the Treasury, in consultation with the President and with a two-thirds vote of the Federal Reserve Board, to advance funds to the FDIC to rescue a bank deemed too big to fail. The loan would be repaid with a special assessment on the banking industry, which would be based on total assets, rather than insured deposits.
* Require credit unions to build reserves to 7% of assets, up from 6%.
PHOTO : Sen. Donald W. Riegle Speeding markup of reform bill