The Supreme Court's ruling Tuesday in the Barnett case is a clear-cut victory for banks, and it could allow the industry to dodge even tougher limits on insurance powers that were brewing last week in the House Banking Committee.
For months, bank insurance powers have been at the center of the congressional stalemate over House Banking Committee Chairman Jim Leach's Glass-Steagall bill.
As recently as last Friday, Rep. Leach was forging a plan to impose a five-year moratorium on the comptroller of the currency's ability to grant new insurance powers for banks, according to bankers who attended a meeting with the panel's general counsel, Joseph Seidel.
The plan also would have reversed the comptroller's decision that would allow Magna Bank of Missouri to obtain a federal charter and retain its insurance businesses, which are of a sort typically forbidden to national banks.
Finally, the new plan would have blocked the agency from allowing new activities through subsidiaries, Mr. Seidel told the bankers.
Even without the Barnett decision, however, this plan takes a back seat to Rep. Leach's "mega-solution" to repeal Glass-Steagall, provide banks with regulatory relief, rescue the thrift fund, and merge the bank and thrift charters.
Rep. Leach was to meet today with House Republican leaders to figure out where to go next.
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Content to let the Bankers Roundtable struggle to negotiate a deal on the Glass-Steagall bill's insurance provisions, other banking trade groups have been little more than a peanut gallery criticizing every suggested compromise.
Last week the Independent Bankers of American Association got a taste of what it's like to broker a deal nobody wants.
The trade group proposed taking some of the bite out of the Comptroller's moratorium by allowing the agency to grant insurance powers that were "part of banking," but forbidding new activities that were "incidental" to banking.
The Comptroller's Magna decision also would have been reversed under the trade group's plan, and the agency would have been barred from allowing new activities through subsidiaries. Finally, the deal would have preserved the right of national banks to offer insurance in towns of 5,000 or less.
But the plan still proved too restrictive for groups that want to affiliate with insurance companies, particularly the Financial Services Council. "The insurance provisions must be taken entirely off the table, or you must allow affiliations," said Samuel J. Baptista, president of the Financial Services Council.
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Peter Brereton wants to build Cleveland-based KeyCorp into a political powerhouse.
Named director of government relations last week, Mr. Brereton said he plans to double annual fund-raising for KeyCorp's political action committee to about $300,000 to match other big players such as Citicorp and Barnett Banks Inc.
"That may be a lot of money for a bank PAC, but if you look at the nonbank competition, they tend to raise a lot more," Mr. Brereton said. "To be competitive as an industry, we've got to do a lot better."
Mr. Brereton said he also wants to involve the company's 30,000 employees into more "grassroots" lobbying efforts. With offices in 14 states, KeyCorp's employees can provide coast-to-coast campaigns on behalf of the industry.
Mr. Brereton, 42, previously headed government relations at Society National Bank, which merged with KeyCorp in 1994.
