In a single day, with a single bold merger, pending legislation
Congress to sweep away Depression-era restrictions on the financial-
services industry has been given a sudden, and unexpected, new
of passage. Just a week ago the measure, the 11th attempt in two
decades to update the United States' banking laws, was written off
But the announcement this week of the giant merger of Citicorp
Travelers' Group, not only altered the financial landscape of
banking, but it also changed the political landscape in Washington.
Now the measure, long a political football in Congress, has a new
chance at life when the House takes it up again in early May.
In part, this is because Congress does not want to appear as
though it is falling far behind a marketplace that has consistently
come up with creative ways to sidestep Congress and federal banking
laws with new financial combinations -- banks with securities
affiliates, securities firms that offer insurance -- that challenge
But the Travelers-Citicorp union pushes harder at the edges of
federal regulations, and that is why this deal has hit Congress with
It is bigger than earlier financial-services deals and the
proposed new company cuts across so many lines of regulated business
-- insurance, investment banking, commercial banking, asset
management, credit cards and retail brokerage. Besides, if Congress
does not act, most of the deal can go forward anyway by exploiting
existing laws, an action that could encourage others to follow.
Within 24 hours of the deal's announcement, lobbyists for
insurance, banks and Wall Street were huddling with congressional
banking committee staffers to fine-tune the measure that would
the 1933 Glass-Steagall Act separating commercial banking from Wall
Street and insurance, to make it politically acceptable to more
members of Congress.
Sen. Alfonse D'Amato, R-N.Y., chairman of the Senate Banking
Committee, said he was willing to speed up his timetable for Senate
consideration of the measure, and would take up the measure this
spring, if it passed the House. D'Amato has, in general, supported
updating Glass-Steagall, but had previously indicated that he did
want the Senate to take up this bill until after the fall elections.
D'Amato also called on Treasury Secretary Robert Rubin on
Wednesday to urge that the administration drop its opposition to the
measure, because it gave more power over banking to the Federal
"This merger creates new impetus that was otherwise lacking in
Congress to move forward," D'Amato said. …