Senate Ready to Take Aim at Banking Bill
WASHINGTON - The Senate Banking Committee is finishing work on the outlines of a banking bill that takes a far more modest view of industry restructuring than the package its House counterpart approved last month.
The Senate legislation, which could be unveiled as early as Tuesday, is expected to call for repeal of the Glass-Steagall Act, as did the House bill. But in contrast to the House banking pannel, the senators are unlikely to try removing restrictions that prevent commercial and industrial companies from owning banks.
The Senate panel is likely to join the House Banking Committee in calling for an end to interstate branching restrictions - but only for the best-capitalized banks. In addition, bank insurance powers are likely to be limited in the Senate package.
"The Senate is going to take a far less ambitious approach than the House," said Robert Rusbuldt, a lobbyist for the Independent Insurance Agents of America.
Delaware Base Doubtful
Insurance agents are looking to the Senate to close down Delaware as base for launching nationwide marketing of insurance by Citicorp, Chase Manhattan Corp., and other big banks.
A proposed outline of a Senate bill that was circulating privately last week indicated that the package would bar states from authorizing insurance underwriting.
The outline, which was obtained by the American Banker, would also deal with the Delaware situation by prohibiting banks from selling insurance except in states where they have branches - and then only where state law permits such activities.
"If I were Delaware, I'd be worried," said one key Democratic staffer, who asked not to be named.
Interstate Branching Issues
Also eager to regain lost ground is the Independent Bankers Association of America. It lost more battles than it won when the House Banking Committee and its financial institutions subcommittee considered the Bush administration's banking reform bill.
Gary Kohn, the trade group's Senate lobbyist, believes that on the issue of interstate branching, the upper chamber's version will have more restrictions than the House bill.
The Senate Banking Committee chairman, Donald W. Riegle, and his aides have been meeting with other committee members and staff in closed meetings over the past month in an effort to reach a consensus on key issues. As a result, the bill Sen. Riegle unveils is likely to emerge from the Senate Banking Committee largely unchanged.
The Michigan Democrat was said to be aiming for a July 16 committee vote on the package, but the timetable could easily slip, according to industry sources. A committee spokeswoman declined to discuss the bill last week.
According to the outline, the legislation would closely follow a proposal sponsored in 1988 by former Sen. William Proxmire, then the banking panel's chairman. That measure called for a phase out of the Glass-Steagall Act's restrictions on securities underwriting.
The new proposal would add some restrictions, strengthening the requirement for securities affiliates to be separately capitalized and prohibiting the use of a bank's name by an affiliated mutual-fund company.
The measure would streamline the conversion of a thrift to a national bank charter. Healthy thrifts would have the right to convert automatically, and approval by the Office of Thrift Supervision - which critics have accused of obstructing conversions - would not be required.
Industry and Senate sources also said the panel is considering the addition of several provisions.
One is a bill sponsored by Sen. Jake Garn, R-Utah, that would limit environmental liability for banks and other lenders with loans secured by properties that turn out to be contaminated by hazardous wastes.
Sen. Garn is trying to persuade Chairman Riegle to include it in the bill to be considered by the panel later this month.
To accommodate Sen. Garn, the panel's senior Republican, Sen. Riegle is expected either to include lender liability in the bill or to ask the committee to report out a separate bill along with the larger reform package, according to Senate aides.
The committee is also expected to include a money-laundering provision championed by Sen. John F. Kerry, D-Mass., that cleared both the House and Senate in separate forms during the last Congress but did not win final approval.
The House panel went so far as to set up a special task force to study the regulatory system and make recommendations, but decided in the end to leave that issue for another bill.
In the Senate, a consensus is believed to be developing around a simple move to merge the Office of Thrift Supervision and the Office of the Comptroller of the Currency into a single, independent agency. Both are now housed within the Department of Treasury.
PHOTO : The House Banking Committee has passed a sweeping bill, despite the initial skepticism of Chairman Henry Gonzalez. But now other congressional leaders are preparing to weigh in.
PHOTO : John Dingell's House Energy and Commerce Committee is likely to resist repeal of Glass-Steagall and mixing of banking and commerce.
PHOTO : Jack Brooks of House Judiciary Committee is believed to be wary of interstate branching because of supposed anti-competitive effects.
PHOTO : Dan Rostenkowski and the House Ways and Means Committee will want to examine implications of bailout costs for the federal budget.
PHOTO : Donald Riegle's Senate Banking Committee may consent to Glass-Steagall repeal but oppose banking-commerce provisions.