To prevent a party-line stalemate when the House Banking Committee votes on Glass-Steagall reform Thursday, Chairman Jim Leach plans to pare regulatory relief from the sweeping bill.
Many Republican members are unhappy that to gain Democratic support Rep. Leach has agreed to remove provisions that would weaken the Community Reinvestment Act and the Truth-in-Savings Act.
But Rep. Leach's strategy may pay off.
Rep. Bruce Vento, a senior Democrat on the committee, said his party colleagues will have an easier time supporting the package now that it is insulated from attacks on CRA and Truth-in-Savings.
"Most of us want to support modernization of the financial services marketplace," said the Minnesota Democrat.
Rep. Vento led a Democratic effort last week to force new hearings on the bill because it had changed so much since being approved in May 1995. Among other things, the Glass-Steagall bill now has a number of controversial insurance provisions.
Rep. Leach finally agreed after House Republican leaders told him the committee must reconsider the package before sending it to the House floor.
Rep. Leach's bill would repeal the Depression-era Glass-Steagall Act - which separated commercial from investment banking - and allow bank and insurance companies to affiliate. The legislation also lays out how bank insurance sales should be regulated.
Despite Rep. Leach's efforts to prevent dissent, bank lobbyists predicted Tuesday that many lawmakers will fight to change, or even block, the bill.
"There will be all kinds of amendments floating around," said Peter Kravitz, lobbyist for the Independent Bankers Association of America.
It's nearly impossible to predict what lawmakers will do, because the final draft of Rep. Leach's plan was just released Monday, said Edward L. Yingling, chief lobbyist for the American Bankers Association.
Rep. Leach may get some Democratic votes by including their pet projects on his slate of amendments, lobbyists said. Possible changes include restrictions on automated teller machine user fees and new disclosures for auto leasing costs.
"A key to this vote will be whether Rep. Leach can reach some agreement with key Democrats," Mr. Yingling said.
But some Republicans also may be a problem for Rep. Leach.
Rep. Bill McCollum of Florida, where Barnett Banks is based, has reportedly lined up against the legislation and is looking for allies, sources said. Aides to Rep. McCollum didn't return phone calls Tuesday.
Industry lobbyists are also making last-ditch efforts to shape the committee vote. Nineteen members from states where ABA state affiliates oppose the bill are getting intense pressure from local bankers to block the package.
The 10 committee members from New York, on the other hand, are feeling heat to support the big money-center banks, including J.P. Morgan, Bankers Trust, and Chase Manhattan.
Industry pressure cuts across party lines.
If Democrats chose to block the bill, New York lawmakers would have to chose between their party and a powerful industry in their home state. On the other hand, many Republicans would have to choose between their state ABA affiliates and an obligation to Chairman Leach.
"This is going to be a difficult situation for a lot of members," said Mr. Yingling. "They are caught between the politics back home and party loyalty."