Magazine article American Banker

Bankers Blast Reform Bill Approved in Subcommittee

Magazine article American Banker

Bankers Blast Reform Bill Approved in Subcommittee

Article excerpt

Beating long odds, a key House Commerce subcommittee on Friday approved legislation that would overhaul the nation's financial laws.

The bill, which would allow mergers among banks and securities and insurance firms, is slated for a House Commerce Committee vote Wednesday. While committee approval is expected, chances are slim that the measure can make it to the House floor before Congress' scheduled adjournment Nov. 7.

The insurance and securities lobbies continued to back the bill Friday while the banking industry blasted it. Top among bankers' concerns: Federal regulators would be stripped of their power to preempt state insurance rules.

The industry also objects to provisions limiting bank operating subsidiaries, restricting securities work by trust departments, and exempting rivals from Federal Reserve Board supervision.

Rep. Michael Oxley, chairman of the Commerce Committee's finance subcommittee, told reporters after the 23-to-2 vote that lawmakers want to work out a deal with the banking industry.

"The banks are going to end up fine," he said. "They just need to be a little patient."

Independent lobbyist Richard F. Hohlt said banks and thrifts must turn up the heat to prevail over the securities and insurance industries. "Somebody in the Republican leadership needs be convinced there's going to be a war if they bring this to the floor," he said.

But American Bankers Association lobbyist Edward L. Yingling predicted "the odds are significantly against" the bill.

Only two amendments to Rep. Oxley's plan were approved Friday.

First, the panel stripped out provisions that would have allowed Federal Home Loan Bank members to use advances for small-business, economic development, and agricultural loans.

Lawmakers argued that the system's lending capabilities should not be expanded as long as securities issued by the Home Loan banks are exempt from registration with the Securities and Exchange Commission. …

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