Treasury Official Upbeat On Banking Reform Bill
Glauber Strikes Conciliatory Note in Speech
PHILADELPHIA -- Despite recent moves in the House to water down the banking reform bill, the Bush administration remains optimistic that it can get a bill it likes through Congress, Treasury Under Secretary Robert Glauber said.
"I believe we can get good, comprehensive reform out of this process," he told a conference sponsored by the University of Pennsylvania's Wharton School.
"We have a good shot at getting a very comprehensive bill that is fair," Mr. Glauber added. He stressed that the administration wants to keep the wide-ranging bill intact and "take a scissors to what we don't like" either at the committee level or on the House floor.
Hint of Optimism
The comments, made Friday, sounded more upbeat and conciliatory than statements attributed to Mr. Glauber and other Treasury officials earlier last week when subcommittees of the House Energy and Commerce Committee began tearing into some of the administration's reform proposals.
The committee, headed by Rep. John D. Digell, D-Mich., is a bastion of opposition to banks' entry into the securities business.
The administration wants to give banks securities and other new powers by repealing the Glass-Steagall Act and amending the Bank Holding Company Act. Rep. Dingell and Rep. Edward Markey, D-Mass., head of the telecommunications and finance subcommittee, proposed rolling back some of the powers banks have already gained.
Many bankers have threatened to withhold support for the bill if the Energy and Commerce panel succeeds at putting its more restrictive stamp on it.
Talk of Veto Dismissed
In his Wharton School appearance, Mr. Glauber dismissed talk that the administration should be threatening a presidential veto or other action to counter Rep. Dingell.
"There is still a long way to go," he said. "This is not the time to talk about abandoning the process."
The administration's interest is in ensuring "fair and open competition" and protecting the taxpayer by strengthening financial institutions and their insurance funds, he said. It will oppose measures that it deems "anticompetitive."
Mr. Glauber singled out an Energy and Commerce Committee amendment, known as an anti-tying measure, which would prevent banks that underwrite a corporation's securities from making loans to that corporation for 90 days.
Firewalls Deemed Necessary
Mr. Glauber said the administration supports firewalls between banks and their securities affiliates, but the anti-tying provision is a "cure worse than the disease. We don't want to rule out synergies."
"Rep. Dingell's bill got an initially strong negative reaction, but it is not as bad as it may have appeared," said Mary Ann Gadziala, counselor to Securities and Exchange Commission Chairman Richard Breeden. "I think there is flexibility -- a chance this can be massaged and made more acceptable."
Mr. Glauber, too, suggested there is ground for compromise.
Asked if he can work with Rep. Dingell, Mr. Glauber replied, "Absolutely. He's a very reasonable guy."
After titters subsided from the audience of 70 executives and academics familiar with Rep. Dingell's antagonism to the administration, Mr. Glauber praised Rep. Markey at length. He came to know the Massachusetts Democrat while investigating the causes of the 1987 stock market crash, and called him "very able."
Also at the Wharton conference, Robert Litan of the Brookings Institution said the administration would do well to accept the reform bill without newpowers provisions and hence without the contentious Dingell-Markey restrictions.
With Congress certain to accept a bill that provides for early intervention by regulators in problem banks, recapitalization of the Bank Insurance Fund, revision of the too-big-to-fail policy, and interstate branching, "the administration ought to declare victory and go home."
"It's a damn good bill," Mr. Litan said. "On a scale of 1 to 10, I'd say it's a 7."