Marathon Session Yields CRA Pact between Congress and White House

Article excerpt

With the contours of a long-awaited agreement on financial modernization now in place, the financial services industry's equivalent of the Berlin Wall may be just weeks away from a bulldozing.

As early as today, congressional staff will begin circulating a bill that reflects the crucial Community Reinvestment Act compromise reached in the wee hours Friday morning by the White House and senior lawmakers, as well as prior agreements on unitary thrifts, operating subsidiaries, and privacy protections.

If a majority of the 66 House and Senate conferees sign the bill in the next week or so, the legislation will be sent to the full House and Senate for approval. The final stop for enactment of what has been officially dubbed the "Gramm-Leach Act" would be President Clinton's desk.

Industry lobbyists were buoyant as the biggest financial reform package in decades finally appeared within reach.

"If (Sen.) Phil Gramm is happy and (Rep.) Jim Leach is happy and the White House/Treasury is happy, it's hard to imagine that there is going to be any problem getting a majority of the conferees to sign the bill," said John Hanley, a lobbyist for the Independent Community Bankers of America.

"This thing is basically a done deal," said American Bankers Association lobbyist Edward Yingling, who earlier in the week described himself as "miserable." "We would expect it to be on the President's desk inside two weeks." Both organizations strongly endorse the legislation.

Crucial to the agreement were a series of last-minute concessions by Republicans, most notably Sen. Gramm, the Texas Republican and Senate Banking Committee chairman. The concessions were sufficient to bring several House and Senate Democrats aboard, including Sen. Charles Schumer of New York.

An exhausted but ebullient Rep. Jim Leach, chairman of the House Banking Committee and of the conference panel, adjourned the pivotal 12-hour meeting at 2:15 a.m.

The controversy over the 1977 law, which requires regulators to rate banks on their lending to the poor, was the last of several issues resolved by the conference committee convened to reconcile the separate Senate and House versions.

Parties to the CRA agreement -- struck behind closed doors in the House Banking Committee's interior offices as lobbyists and reporters milled about anxiously outside -- said they were reserving final judgment on the bill until they could see the precise legislative language.

"Significant improvements relative to the (bill) were made," said Treasury Secretary Lawrence H. Summers in a handwritten statement issued after the nonbinding voice votes were taken. However, he added, "nothing is done until the language is fully reviewed."

Government lawyers are expected to complete today or Tuesday the process of translating the agreement into a formal bill. After that, copies will be circulated to the conferees, who will likely be given a week or two to decide whether to sign the legislation. During that time they will in all likelihood be lobbied furiously by privacy advocates, CRA supporters, commercial firms seeking to purchase unitary thrifts, and others unhappy with the outcome so far. …