White House Threatens To Veto Bill
WASHINGTON - The Bush administration on Tuesday threatened a veto of the banking bill if Congress removes or restricts measures allowing banks to offer insurance, underwrite securities, and branch across state lines.
The warning came as the House of Representatives was preparing to debate the legislative package, perhaps beginning today.
Reassuring Big Banks
On Tuesday, the powerful Rules Committee was deciding which version of the bill would go to the House floor.
The veto threat from the White House may have been intended to reassure some bigbank lobbyists who have begun to question the administration's resolve in opposing watering-down of its initial reform proposals.
But prospects for the administration's original package have grown so bleak that the Treasury Department has decided to "play defense" and work to strike provisions affecting bank powers, according to Rep. Peter Hoagland, a Nebraska Democrat who has worked closely with the Treasury.
Rep. Hoagland said administration officials decided last week that the best course would be to strike the section that deals with bank powers.
Broad Bill Still Priority
A Treasury Department spokeswoman disputed Rep. Hoagland, saying the broad bill remains the priority.
Many representatives of large banks had concluded that President Bush would sign a bill to recapitalize the Bank Insurance Fund, even if it included restrictions on insurance and securities powers, as drafted by the House Energy and Commerce Committee.
Those restrictions were incorporated in a compromise reached last week by Energy and Commerce Chairman John D. Dingell, D-Mich., and Banking Committee Chairman Henry B. Gonzalez, D-Tex.
Even as he applauded the veto threat, Edward L. Yingling, the American Bankers Association's chief lobbyist, said bankers must keep an eye on the administration's actions.
"Where exactly is that line" distinguishing a good bill from a bad one, he asked.
In its salvo on Tuesday, the administration warned that if the Energy and Commerce Committee amendment or one like it is adopted, "or if the interstate branching provisions are substantially weakened, the President's senior advisers would recommend a veto."
House Rules Committee Chairman Joe Moakley, D-Mass., indicated that his panel is likely to send to the House floor a version of the bill that incorporates the Dingell-Gonzalez compromise.
"If nobody is going to make a big stink out of it, I think we may go with that," Rep. Moakley said during a break in the panel's hearing. "It just makes it easier."
If the compromise is included as original text in the bill, the administration will have a much more difficult time salvaging its version of financial industry reform and may ultimately be forced to put its weight behind an amendment striking the bill's "products and services" section.
Mr. Moakley also said the panel is considering a set of rules that would permit general debate beginning today, with debate on amendments starting Thursday.
Gonzalez Blasts Industry
Speaking to the Rules Committee, Rep. Gonzalez excoriated the banking industry, and the ABA in particular, for obstructing necessary change "because they did not get all they wanted."
"We did not report H.R. 6 for the ABA," he said, referring to the the banking bill's sequence number. "The banks gain much from this legislation, but they must accept responsibility."
Calling banking "one of the most privileged sectors," Rep. Gonzalez said the industry should not be allowed to continue the kind of discrimination indicated in a recent Federal Reserve report on mortgage lending.
He urged the rules panel to permit a floor vote on an amendment by Rep. Joseph P. Kennedy 2d, D-Mass., that would force regulators to step up efforts to identify and correct discriminatory lending practices. Rep. Moakley said he supported having the Kennedy amendment considered on the floor.
Mr. Dingell, a longtime foe of Glass-Steagall repeal, said he still believes the 1933 should not be liberalized. But he said he prefers that Congress adopt his compromise, which repeals Glass-Steagall but adds restrictions on securities underwriting by banks.
In an interview, Mr. Dingell said he has concluded that it is best to resolve the issue now, rather than face requests for Glass-Steagall repeal in every Congress.