Top Bankers, Gathering in D.C., Cast Skeptical Eye on Bush Bill
WASHINGTON - As many as 400 of the nation's top bankers are expected here today for a meeting that could prove crucial to revivifying the Bush administration's effort to overhaul the financial services industry.
The bankers, taking part in the American Bankers Association's banking leadership conference, are increasingly nervous about the reform bill taking shape in Congress.
Many had hoped to gain a broader range of powers, but they are now concerned that the bill will restrict insurance and securities powers they already have and impose new obligations to serve the poor.
"There will be a lot of discussion on how much we are willing to take on products and services, and the answer is |not much,'" said Edward L. Yingling, chief lobbyist for the American Bankers Association.
As a result, the conference could set the stage for a policy change this month that would place the banking industry in opposite to comprehensive reform legislation. Instead, the industry would likely lobby for a "narrow bill" that would give the Bank Insurance Fund new funding and tackle a limited number of other issues, such as interstate branching.
Commerce Panel Holds Key
The ABA is likely to wait for the House Energy and Commerce Committee to finish its work on the legislation before making a fundamental change in its strategy. But if that panel votes to curb bank insurance and securities powers, as it is widely expected to do, industry support for the bill could evaporate.
In that event, the Bush administration's package would lose a key, and perhaps necessary, constituency.
"My feeling is that the bill is in deep trouble," said Richard Peterson, an aide to Rep. Doug Barnard, D-Ga., and one of Capitol Hill's most influential staff voices on banking legislation.
Most of the industry's fears focus on the conference committee that would likely have to reconcile differences between House and Senate bills. In that panel, industry influence would be minimal, and bankers are concerned that their legislator friends would be outnumbered at the conference table.
Losing a Decade's Gains?
"Many in the banking industry would not want to risk going to a [House-Senate] conference and basically losing almost a decade of favorable court and regulatory interpretations of bank laws," said Mr. Peterson, who played a key role in moving the administration's bill through the House Banking Committee.
"It's ironic, but a bill that started off giving banks more powers looks like it's going to end up cutting us off at the knees," said Charlotte LaGates, a spokeswoman for the National Council of Savings Institutions, which represents savings banks.
Bush administration officials remain optimistic.
"The Bank Insurance Fund needs to be recapitalized this year, and to recapitalize it without addressing fundamental problems affecting the industry would be a mistake," said a Treasury Department spokeswoman.
Despite the banking industry's misgivings, the Treasury Department was pleased with the work of the Senate Banking Committee, particularly since the panel took a comprehensive approach, the spokeswoman said.
Sam Baptista, president of the Financial Services Council, warned that the tide is running against the administration bill.
"If you had sat down a year ago and tried to come up with a worst-case scenario, I don't think you could have come up with anything worse than the environment we face now," said Mr. Baptista, whose organization represents big bank and diversified financial services concerns that seek sweeping reform.
Mr. Baptista, perhaps the administration's most enthusiastic supporter, said almost everything is working against the bill, from the rapidly approaching congressional adjournment to the spate of summer scandals that are giving lawmakers jitters.
Insurance Agents Like Bill
While bankers are nervous about the way the bill is shaping up, other key groups are more enthusiastic. Independent Insurance Agents of America, for example, is pressing for legislation that would curb bank insurance activities.
"We need a bill," said Robert Rustbuldt, a lobbyist for the insurance group. "But it has to be the right bill."
The insurance agents were pleased with the bill that cleared the Senate Banking Committee, and many observers believe they will do even better when the House Energy and Commerce panel, led by administration critic Rep. John Dingell, D-Mich., begins work.
Meanwhile, the Senate Banking Committee staff has not yet completed work on the legislative product approved before the committee left town in early August for a one-month recess. The final legislative language and accompanying report are now expected to be ready this week or next, opening the door for a floor vote in early October. as chief financial officer.