Academic journal article ABA Banking Journal

Don't Uncork the Champagne Just Yet

Academic journal article ABA Banking Journal

Don't Uncork the Champagne Just Yet

Article excerpt

The Republican-led 104th Congress is cause for optimism, but ABA experts caution that it's a little early for euphoria

Yes, the Senate is back in Republican hands. And, yes, the House has been regained by Republicans for the first time in decades. But bankers can put away the leftover tinsel from the holidays. Though an elephant may look somewhat jollier than a donkey, Santa Claus has not come to town--at least not in Washington.

"A lot of people here would like to think that all the Democrats curled up and died here on Nov. 9, but that doesn't happen to be the case," says a long-time Washington observer.

So even though monumental changes have occurred in Washington, that doesn't mean banks can expect to just walk in and get everything they want, was the general consensus among ABA lobbyists.

In a series of interviews with the ABA staffers that bring bankers' views to Capitol Hill, a consistent mood comes through that can best be described as "guarded optimism."

Changing of the guards

The change in majority party in both houses led to some immediate shifts as well as much speculation, some of it already torpedoed and some of it still in the realm of possibility. This article, finalized in mid-December, is itself subject to being overtaken by the shifting sands of a new Congress.

A few basics are now certain. New York's Sen. Alfonse M. D'Amato will chair the Senate Banking Committee. Iowa's Rep. James A. Leach will chair the renamed House Banking and Financial Services Committee. Virginia's Thomas J. Bliley, Jr., will chair the House Commerce Committee, which is what emerged from a congressional reorganization process from what had been the Energy and Commerce Committee, previously ruled by Michigan's John Dingell. The key Commerce subcommittee for banking--Telecommunications and Finance-will be chaired by Jack M. Fields of Texas.

A much-rumored revision of jurisdictional lines between the House's banking and commerce committees was made, with the balance of apparent power shifting toward the banking committee. This has the potential of assisting banks interested in new products and services legislation. More on this under the heading "Shifting House jurisdictions."

With any issue, it's necessary to watch for the difference between apparent urgency and true urgency. No issue better illustrates this than the possibility that Congress will address concerns about the BIF-SAIF issue.

"There will be some hearings," predicts Floyd Stoner, ABA's director of federal legislative operations, "because there are some who think that this is a crisis about to happen. But there are others, of course, who don't think it is and hearings may be all that it amounts to." The issue is a top ABA priority.

The association is adamant that there will be no merger.

It will take some time before the picture for banking becomes clear, Stoner points out. Banking issues won't be part of the Republicans' first 100 days, he notes.

House prospects

Chairman Leach has indicated he'd like to see some movement on Glass-Steagall. But what that means--total repeal, partial repeal--isn't clear yet, according to Stoner.

The clearest hints given by Leach in public come from a carefully worded speech given just after the election.

"It's my view that the time is ripe for ending some of the divisions between investment and commercial banking," Leach stated. A capital hawk, Leach reiterated his past stance that only well-capitalized banks should be permitted to take on investment banking authority.

Leach also noted that Congress has somewhat been overtaken by events. "My own guess is that there is a decent chance of actual statutory change, but it's not of as historical dimension as might be suspected in the marketplace," said Leach. "What you have is a circumstance a little bit like interstate banking ... what Congress actually did was recognize a change in the landscape, rather than change the landscape itself. …

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