House Banking Committee Chairman Jim Leach worked overtime - many would say he went overboard - to pass sweeping financial reform in 1996.
With the Senate and the administration showing little interest in passing a major reform bill, Rep. Leach recently complained that the "awkward climate" weakened his hand.
Still, he single-handedly entangled an army of banking, insurance, and securities lobbyists. The legislation affected them all because while repealing Glass-Steagall, it also would restrict bank insurance sales. Though the Iowa Republican's plan would h ave expanded bank powers, many in the industry argued his legislation was too restrictive. For instance, new securities underwriting powers would be allowed only in holding company subsidiaries regulated by the Federal Reserve.
Industry opposition solidified after the Supreme Court ruling in the Barnett Banks case confirmed banks' power to sell insurance from small towns. A securities bill that cut off hard-fought gains in insurance wasn't worth it.
Rep. Leach realized he couldn't beat the industry and yanked his bill in June. He heaped most of the blame on Comptroller of the Currency Eugene A. Ludwig for refusing to cede power to the Fed.
To quell opposition, Rep. leach has pledged to let bank subsidiaries underwrite securities when he introduces new reform legislation next month. But he could be in for another fight. Senate Banking Committee Chairman Alfonse M. D'Amato and Treasury Department officials are drafting much more aggressive bills.
"I believe in Glass-Steagall reform and a strong and competitive national bank charter," Rep. Leach said, "but have reservations about the administration's stated desire to mix commerce and banking."