WASHINGTON -- The Senate Banking Committee yesterday lumbered through its first day of deliberations on a comprehensive bank reform bill, raising concerns that work on the legislation may not be finished by Sept. 30.
Rapid completion of work on the bill is considered necessary because of the need to recapitalize the bank insurance fund, which may go broke by Sept. 30, the end of the federal fiscal year.
After adjourning at the end of the week, the Senate is not scheduled to meet again until Sept. 10. Because the Senate does not schedule votes on Mondays and will not conduct votes on Sept. 18, a Jewish holiday, the committee would have only 11 days in September to vote on the legislation and get it passed on the Senate floor.
But committee Chairman Donald W. Riegle, D-Mich., reminded members that the panel already has a full plate of issues awaiting it in September.
The committee will have to vote on providing more funds to the Resolution Trust Corp. to continue the savings and loan cleanup, conduct confirmation hearings for the renominations of Federal Reserve Board Chairman Alan Greenspan and Comptroller of the Currency Robert Clarke, conduct hearings on the alleged skullduggery at Bank of Credit and Commerce International, and more.
"We are in an incredible time crunch," Sen. Riegle said. "I think we have an obligation to act."
But other panel members, citing the complexity of the proposed banking reforms, said they would prefer to have more time to study the issues.
Among other things, the legislation would recapitalize the faltering bank insurance fund, allow banks and securities firms to affiliate with each other, and allow banks to branch out across state lines.
Sen. Alfonse D'Amato, R-N.Y., said such sweeping changes require more analysis and study. "This is of major consequence," he said. "I believe we should come back in September and debate these issues fully."
In preparation for yesterday's deliberations, the committee conducted 36 hearings that included 95 witnesses. Noting those figures and the fact that the banking committee in past years has voted to repeal some or all of the 1933 Glass-Steagall Act, the law that separates investment and commercial banking, Sen. Christopher Dodd, D-Conn., said in exasperation, "Some of these issues are not new."
Nevertheless, the panel's work was bogged down at the outset as members debated the most appropriate timetable for action. In addition, at least one member of the Senate, making use of an obscure parliamentary tool peculiar to the Senate, registered an objection to yesterday's proceedings, casting doubt on the ability of the panel to undertake substantive action.
Under Senate rules, committees are not supposed to hold hearings or conduct votes while the Senate is in session. If a senator registers objection to such a hearing or vote, the panel's action could be ruled out of order once it reaches the floor.
But Sen. Riegle said his conversations with Senate parliamentarians suggest the panel could move ahead with its deliberations and stop just short of taking a final vote on the legislation as he attempts to mollify the senator making the objection.
Nevertheless, members of the banking committee spent most of yesterday getting a briefing on arcane provisions of the legislation before them, rather than voting on amendments.
Efforts to reform the laws governing how banks and securities firms do business have enjoyed little success in recent years. Several years ago, for example, the Senate overwhelming approved legislation that would have repealed Glass-Steagall. But the bill died in the House.
This year's assault on Glass-Steagall got a boost when the Treasury Department unveiled a comprehensive plan that would allow banks and securities firms to affiliate and implement a host of other sweeping reforms. The plan was backed by President Bush as a domestic priority.
The House Banking Committee in late June adopted a good deal of the Treasury plan, including provisions that would allow commercial firms, such as manufacturers, to own banks. That provision, in conjunction with the bill's relaxation of Glass-Steagall restrictions, also would allow securities firms owned by commercial companies to affiliate with banks.
That banking panel legislation has since been referred to four other committees, including the House Energy and Commerce Committee. They were given until Sept. 27 to act on the measure.
The long referrals in the House, coupled with the Senate Banking Committee's apparent troubles in moving on the legislation expeditiously, further cloud the chances that the sweeping financial reform legislation will be approved this year.