With the Senate about to debate financial services reform legislation, two key Republican senators signaled Thursday that they plan to fight the bill.

Sens. Phil Gramm and Richard C. Shelby warned fellow senators in a letter that provisions buried in the bill would significantly widen enforcement powers of the Community Reinvestment Act.

"While there are many good things in HR 10," they wrote, "proponents conveniently gloss over the issues that will effect local bankers in your state the most: the expansion of CRA."

Regulators could punish violators by fining directors and officers up to $1 million a day, limiting insurance or mutual funds sales by operating subsidiaries, and restricting or shutting down nonbank affiliates, the letter said.

The attack on the bill foreshadows the senators' plan to "fight it tooth and nail" on the Senate floor, one of their aides said. Both lawmakers lost efforts to remove CRA-related measures during a Senate Banking Committee vote earlier this month.

The Senate could take up the bill as early as today, but a final vote is not expected until sometime next week.

Meanwhile a group of 54 banking, insurance, and securities executives urged the Senate to approve the bill. "The volatility of financial markets around the world in recent weeks has only underscored the need for fundamental financial services reform," wrote the executives, including Merrill Lynch & Co. chairman David H. Komansky and Norwest Corp. chairman Richard M. Kovacevich.

Sanford I. Weill of Travelers Group and John S. Reed of Citicorp lobbied Treasury Secretary Robert E. Rubin and other Clinton administration officials at the White House on Wednesday, a Treasury Department official said. The two men urged administration officials to reconsider their opposition.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.