Stage set for action on branching bill.

WASHINGTON -- The Senate's Democratic leaders are expected to try to move interstate branching early this week - perhaps even Tuesday - when Congress returns from a long August break.

Although the bill still faces significant hurdles, industry advocates said progress has been made in dealing with some of the procedural difficulties the measure is expected to confront on the Senate floor.

However, it was by no means clear whether Sen. Howard Metzenbaum, D-Ohio, or Sen. Phil Gramre, R-Tex., would drop their objections to the bill. With so little time left in the congressional session, a single senator can exercise veto power.

"We're getting mixed signals," said Paul Quinn, a lawyer who has played a leading role in moving the interstate bill forward. Mr. Quinn said he has received indications that both lawmakers may be moderating their positions.

Sen. Gramm opposes a provision sponsored by House Banking Committee Chairman Henry B. Gonzalez, D-Tex., that would have the effect of reinstituting his state's ban on home equity loans.

Sen. Metzenbaum believes the hill did not lean far enough to extend state statutes of limitations in cases involving bank and thrift failures. Rumors circulated last week that Senate Republicans would try to block most remaining legislative initiatives, including interstate branching, but industry sources expressed skepticism.

"Those are just rumors," said Edward L. Yingling, executive director for government relations at the American Bankers Association. "We don't think any senator is going to want to be the skunk at the party."

A spokesman for Senate Republican leader Robert Dole did not return calls for comment.

One reason Senate majority leader George Mitchell may be anxious to move the bill early has to do with a calendar quirk. The interstate bill includes a measure authorizing a commemorative coin for Mount Rushmore that would cost more than the amount authorized in the budget resolution.

If the bill is passed in time to permit the Treasury to spend the money before Oct. 1. the spending would count against the budget for the year ending Sept. 30. If not, it goes against next year's budget, and could be subject to a point of order on the Senate floor.

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