Votes on the credit union bill underscore the differences between the Senate and House Banking committees.
When House Banking approved its credit union bill in late March, Chairman Jim Leach presided over an all-day slugfest in which Democrats and Republicans alike tried to torpedo a compromise bill with killer amendments.
Senate Banking, by contrast, passed tougher bipartisan legislation last week in less than an hour. Granted, Chairman Alfonse M. D'Amato delayed the hearing's start for four hours while Republicans fought behind closed doors over how much to limit business lending by credit unions.
But a deal on the matter was struck, and when the hearing started, Sen. D'Amato shrewdly defended the entire pre-ordained package.
"I really don't think this is the place to offer that amendment," the New York Republican told Sen. Richard Shelby, R-Ala., after he proposed dropping community reinvestment requirements for small banks.
"I urge my colleagues at this point in time to exercise some restraint," Sen. D'Amato said before casting his vote with the Democrats and defeating Sen. Shelby's amendment.
When Sen. Phil Gramm, R-Tex., proposed cutting credit unions' community reinvestment requirements from the legislation, Sen. D'Amato lectured him about the political practicality of keeping the bill intact. "Senator, you are too gifted a legislator and too knowledgeable not to know these provisions were contained in the House bill." Sen. Gramm withdrew the amendment and voted for the bill.
House Banking held another marathon session last week as a hearing on megamergers featured 23 witnesses.
After opening statements dragged on for 30 minutes with no end in sight, committee Chairman Leach urged his colleagues to cut their remarks short and let the testimony begin.
Rep. Barney Frank offered a solution inspired by the bank consolidation frenzy itself. "Maybe members could merge their statements and eliminate overlap," the Massachusetts Democrat quipped.
During the hearing, officials from the Treasury Department and the Federal Reserve Board revealed their positions on financial reform remain far apart. Fed Governor Laurence H. Meyer staunchly defended his agency's position that expanded powers for banks should be conducted through holding company affiliates, which are regulated by the Fed.
He argued that the agency could not fulfill its role of guardian against financial crises if banking organizations abandoned the holding company structure to do new business in direct subsidiaries that are subsidized by the federal safety net.
But John D. Hawke Jr., the Treasury's under secretary for domestic finance, emphatically responded that operating subsidiaries are safe, unsubsidized, and entitled to broad financial powers. "This comes down, as Governor Meyer I think very candidly conceded, to a question of concern about the Federal Reserve's jurisdiction," Mr. Hawke said.
"It is just for reasons like this that we have been hesitant to make this point," Mr. Meyer replied, denying any power grab. "What we are talking about is something very profound and important."