Setback for Industry on Bank Bill
Foley Rejects Lobbyists' Request to Block Compromise
WASHINGTON -- House Speaker Thomas S. Foley brushed aside intense industry objections to a legislative compromise and said he expects the House to consider the bank reform bill as early as next week.
"The bill is going to be considered," the Democratic leader said in a session with reporters Thursday. What happens "will be up to the House. We are not going to pull the bill."
Rep. Foley, D-Wash., underscored that message in a meeting with bank and trade group representatives Thursday afternoon.
"We told him the way the process is proceeding, we face the possibility of a very negative bill," said Edward L. Yingling, the American Bankers Association's chief lobbyist. He said Rep. Foley promised to craft a rule to "get the bill to the floor."
House Majority Leader Richard Gephart, D-Mo., said "We need to do a banking bill and I think we will."
Banks Weigh Their Chances
Mr. Yingling said if the compromise is approved by the House, the entire bill would be unacceptable. But he said he did not know if the industry has the votes to block it.
Sam Baptista, president of the Financial Services Council, said, "I would not be optimistic" about blocking the compromise package.
The compromise was crafted by House Banking Committee chairman Henry B. Gonzalez, D-Tex., and Energy and Commerce Committee chairman John D. Dingell, D-Mich.
They would repeal the Glass-Steagall Act but set tough restrictions on securities underwriting by banks. All bank securities activities, except those involving municipal securities, would have to be placed in separate affiliates.
The compromise also would roll back existing bank insurance powers and continue the ban on commercial companies' ownership of banks.
The Securities and Exchange Commission would have access to financial information from banks and their affiliates, and would be the primary regulator of securities affiliates. The Federal Reserve would be "umbrella" regulator for holding companies and all subsidiaries.
The Bush administration rejected the compromise legislation and pledged to continue working for a comprehensive package that would have the effect of expanding bank powers.
"We want a bill that moves the industry forward, not backward," said a Treasury Department spokeswoman.
Meanwhile, Rep. Doug Barnard, D-Ga., the principal House proponent of the administration's broad reform proposal, has prepared a four-title narrow bill that would provide new money to the Bank Insurance Fund and overhaul the deposit insurance system. But some observers said Rep. Barnard is unlikely to succeed unless he wins a Bush administration endorsement.
Kenneth Guenther, executive vice president of the Independent Bankers Association of America and a fierce opponent of the administration plan, said Rep. Barnard is now seeking only to keep alive a vehicle for broad reform that could be used next year. Mr. Guenther called the Gonzalez-Dingell compromise "far better than what the House Banking Committee produced."