In Focus: As Election Nears, Some Bills May Get Left Behind: Chances Best for Bankruptcy, Terror Insurance
Heller, Michele, American Banker
Lawmakers return to Capitol Hill this week with the ambitious goal of moving bankruptcy reform, terrorism insurance, pension, and possibly deposit insurance legislation during their sprint to the November elections.
The prospects for all of those but deposit insurance reform are high. How much other bread-and-butter legislating gets done in an atmosphere strained by high-stakes campaigns and headline-grabbing corporate corruption investigations remains to be seen.
For the next several weeks the spotlight will be on the slew of committee inquiries into corporate malfeasance and the role prominent banks allegedly played in off-balance-sheet financing arrangements, allocations of shares in initial public offerings, and pumped-up research reports.
"It's going to be extremely busy," said a spokeswoman for House Financial Services Committee Chairman Michael G. Oxley, R-Ohio. "We have a few things ready for the floor, but (in the committee) we're going to be in an oversight and hearing mode ... continuing our investigations into Enron, WorldCom, Global Crossing, Citigroup, and others. That's front and center."
Other than the bankruptcy and terrorism insurance bills, financial services companies will have a hard time getting what they want, and they will be watching for any last-minute legislation or amendments they consider damaging.
"The atmosphere is extremely negative for all types of businesses," said Edward L. Yingling, the executive director of government relations for the American Bankers Association. "When you combine that with the usual end-of-the-Congress game-playing, it's going to be a period where we have to be extremely vigilant."
If lawmakers do not complete their long list of must-do work -- funding the federal agencies and creating a Department of Homeland Security -- before the scheduled adjournment date of Oct. 4, they likely will take a break to campaign and then return to Washington after the Nov. 5 elections for a lame duck session.
Such a session likely would be limited to finishing appropriations bills. However, those bills could become magnets for extraneous measures ranging from one that would block regulators from issuing a rule allowing banks into the real estate brokerage business, to another that would limit the use and display of Social Security numbers to protect consumers' privacy.
Whether or not there is a lame duck session, industry officials like Mr. Yingling are keeping a particularly watchful eye on two bills: pension reform and a Treasury Department appropriations bill in the Senate.
Pension overhaul is perhaps the biggest wild card for the financial services industry.
On the one hand, financial firms badly want a provision in a bill the House passed this spring that would allow firms that manage 401(k) and other corporate pension funds to also advise fund participants on how to invest. (Current law makes it difficult for businesses to give their employees access to investment advisers, because the employers worry that they could be liable for bad advice.)
But with lawmakers in the mood to stamp out anything that smells of corporate conflict of interest, the Senate is unlikely to accept that provision and instead advance its own proposal to allow employers to hire investment advisers without the threat of liability -- provided the advisers are independent of the fund managers.
The industry also is worried that the pension bill could become a home for a corporate bankruptcy measure sponsored by Sen. Richard Durbin, D-Ill., that would empower courts during corporate bankruptcy proceedings to recover retention bonuses, severance packages, and other generous payments made to executives.
There is also a chance that the pension bill could become a vehicle for such small-business initiatives as the one sponsored by Sen. …