Banking Overhaul Falters In House
White House, banks and Ralph Nader opposed GOP deregulation measure
WASHINGTON (AllPolitics, March 31) -- House Republican leaders, facing GOP defections and opposition from Democrats, Tuesday abruptly abandoned an effort to win approval of a wide-ranging banking overhaul bill.
The measure had been headed for a vote, with its supporters saying the legislation was vital to keep the nation's financial services sector competitive in the global economy.
Congress should act "lest we lose the lead to hungrier
competitors abroad," Rep. Michael Oxley, chairman of the
House Commerce subcommittee on finance, said. Otherwise, overseas banks and financial companies "will be more and more aggressive" in acquiring U.S. securities firms, the Ohio Republican said.
But the legislation, The Financial Services Act of 1998 (H.R. 10), faced opposition from the banking industry, the White House and consumer activist Ralph Nader. And the defection of some GOP lawmakers meant prospects for passage were increasingly uncertain.
The measure would have allowed banks, insurance companies and securities companies to enter one another's businesses.
Securities and insurance companies strongly supported the bill, but most banking organizations opposed it. The White House also opposed the bill as written, saying it gave an edge to bank-holding companies over nationally chartered banks. Consumers activists, including Ralph Nader, were concerned the legislation could lead to mega-mergers and less competition.
The bill's outlook was also complicated by some legislative maneuvering. Some Democrats opposed an attempt to boost the proposal's chances by combining it with a
another, more popular measure (H.R. 1151) to allow credit unions to expand, despite a recent Supreme Court ruling.
Democrats on the House Banking Committee circulated a letter Tuesday, urging their colleagues not to combine the two proposals.
Rep. John LaFalce (D-N.Y.) told The Associated Press combining the credit union and financial services legislation would be "comparable to buying the credit unions a ticket on the Titanic."
The financial services package also drew opposition from three key Republicans, who said it "places significant new burdens on
financial services firms to the detriment of their customers."
In a letter to House colleagues, GOP Reps. Bill McCollum of
Florida, Richard Baker of Louisiana and David Dreier of California argued the bill would restrict "the ability of the banking system to
meet the challenges of the future."
The Senate has not acted on similar legislation. Sen. Alfonse
D'Amato (R-N.Y.), chairman of the Senate Banking Committee, has said the House would have to pass a bipartisan measure with wide support for his committee to take up the issue.
The Associated Press contributed to this report.
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