Senate Vote Bars Banks From Writing Insurance
WASHINGTON - The Senate took aim at bank insurance powers Thursday, agreeing by voice vote to bar underwriting entirely and to shut down Delaware as a base for banks to market insurance products nationwide.
Continuing work on the omnibus banking bill, the Senate also closed the so-called "Comptroller's loophole," a regulatory decision that had let national banks market insurance broadly from offices in towns of fewer than 5,000 people.
However, the Senate also voted to increase insurance powers for national banks by giving them "parity" with state-chartered institutions.
As a result, insurance powers for national banks would increase in the 16 states that have authorized such activities for the financial institutions they charter.
Bill Falls Short, ABA Says
Edward L. Yingling, chief lobbyist for the American Bankers Association, said the Senate bill was an improvement over the measure taking shape in the House. But it is far from being acceptable to the industry, he added.
The Senate also agreed to drop from its bill provisions that would have repealed the Glass-Steagall Act and given banks broad securities underwriting powers.
House Action Nears
Meanwhile, the House appeared to be nearing a final vote on its own version of the measure Thursday evening.
Amid widespread expectation that the bill would suffer a second defeat on the floor, the White House began lobbying hard for passage of an amendment most banks regard as unacceptably burdensome.
In a letter to House Republican leader Robert H. Michel, President Bush said a bill including that amendment "would be an important step forward in the process of achieving worthwhile reform."
The amendment, sponsored by Rep. Chalmers Wylie, R-Ohio, and Rep. Stephen L. Neal, D-N.C., would let well-capitalized banks branch interstate three years from now but would restrict insurance and real estate powers.
The measure had originally been scheduled for a vote Wednesday night.
Justifying a Vote
But it was postponed a day, apparently to give the bill's advocates more time to drum up support.
Aides to House Speaker Thomas S. Foley had spent much of Wednesday distancing themselves from the Wylie-Neal amendment, a position that many Democrats apparently seized upon to justify a vote against the bill.
Thursday, however, Rep. Foley joined House Majority Leader Richard Gephardt and Democratic Caucus Chairman David E. Bonior in urging support for the bill.
Their letter, however, did not mention the Wylie-Neal amendment.