Trade groups Thursday presented a united front in urging Congress to break down barriers between financial firms-but nettlesome differences lurk beneath the surface.
A letter signed by 10 industry associations urging lawmakers to "permit the cross-affiliation of institutions offering any type of financial service" was delivered Thursday to House Speaker Newt Gingrich, other top lawmakers, and Treasury Secretary Robert Rubin.
Edward L. Yingling, chief lobbyist for the American Bankers Association, said "technical details" remain to be worked out, but the letter from the Alliance for Financial Modernization signified agreement among industry groups on broad issues. "This signals the old battle over turf clearly is over," he said. Treasury Under Secretary John D. Hawke called the letter an "absolutely amazing development" considering the groups have been "at each other's throats" for years.
But a closer look at the letter hints that it may still prove difficult for Congress to craft reform legislation satisfactory to all factions.
America's Community Bankers, one of the groups in the Alliance, refused to endorse the message. The eight over other members of the coalition chose to sign, as did two insurance industry trade groups that are not in the Alliance.
In a separate message to Rep. Gingrich, America's Community Bankers president Paul A. Schosberg said the thrift trade association "generally endorses" the letter from other groups, but warned that two financial modernization bills sponsored by House Banking Committee Chairman Jim Leach and Rep. Marge Roukema would "significantly impair" thrift holding companies by eliminating their current power to affiliate with nonfinancial firms.
Rep. Roukema's bill, which would allow bank holding companies to receive up to 25% of their income from nonfinancial business, was drafted by the Alliance for Financial Modernization.
Separately, Rep. Leach announced Thursday that the banking committee will vote on financial modernization proposals in April or May. The full House could vote on the plan before July 4, he said.
House Banking's financial institutions subcommittee will begin hearings on the bills Feb. 11.
According the 10 industry groups, individual financial operations should continue to be supervised by their traditional regulators. For example, state commissioners should continue setting rules for insurance sales, even those by banks.
Alliance members endorsing the letter were the American Bankers Association, ABA Securities Association, the American Financial Services Association, The Bankers Roundtable, the Consumer Bankers Association, the Financial Services Association, the Investment Company Institute, and the Securities Industry Association.
Also signing were two groups not in the alliance, the American Council of Life Insurance, which represents life insurance companies, and the American Insurance Association, which represents property and casualty carriers.