Insurance Industry, Banks Reach Accord on Reform Legislation

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Proclaiming a major breakthrough on financial services reform, bankers and insurance agents struck a compromise Wednesday on rules that would govern insurance sales.

Yet disputes over Community Reinvestment Act enforcement provisions, powers for operating subsidiaries, limits on the sale of unitary thrift holding companies, and affordable checking accounts for the needy still complicate the chances of enactment before Congress adjourns Oct. 9.

Prospects for the bill that would break down Depression-era barriers between the banking, insurance, and securities industries are "very dire," said a staff member for a pro-reform senator. "When you've got one week left, you don't have to do much to stall it."

"There are just too many issues that are not at closure yet," said Paul A. Schosberg, president of America's Community Bankers. "It is within 48 or 72 hours of make or break."

The deal struck Wednesday between the Independent Insurance Agents of America and the American Bankers Association would make technical changes Banking Committee Chairman Alfonse M. D'Amato is expected to insert when Senate debate begins Friday or early next week.

Supporters have tried to demonstrate progress on the controversial bill this week. House Commerce Committee Chairman Tom Bliley on Tuesday announced that he and Sen. D'Amato had cleared another hurdle by granting the Securities and Exchange Commission the authority to decide which new financial products are securities.

But waiting in the wings are a group of senators who oppose the bill for reasons spanning the political spectrum.

Some conservatives led by Sens. Phil Gramm and Richard C. Shelby have vowed to stall the bill with either amendments or other challenges over CRA-related provisions in the bill. …