A two-year effort by Congress to pass the most sweeping restructuring of the nation's financial system in 50 years has been killed by a jurisdictional dispute in the House.
The House Banking Committee, chaired by Rep. Fernand J. St Germain, D-R.I., and the Energy and Commerce Committee, chaired by Rep. John Dingell, D-Mich., had passed competing versions of legislation permitting bank holding companies to underwrite securities for the first time since passage of the Depression-era Glass-Steagall Act.After three weeks of fruitless negotiations between the two committees, St Germain sought to persuade House Speaker Jim Wright, D-Texas, to permit the full House to vote on his version of the bill.
But Wright, in a private meeting Thursday with Democratic members of the Banking and Rules committees, refused to settle the dispute. Congress is planning to adjourn next week.
"It's obvious we're not going to be able to move much further on the banking bill in this Congress," St Germain said.
However, Wright has agreed to define more specifically which sections of a banking bill would be sent to Dingell next year.
"Since I do not anticipate any major changes on my committee . . . I think it's safe to assume we can act very expeditiously at the beginning of the next Congress," St Germain said in a telephone interview. "It's our hope that . . . we do not have a repetition of the impasse."
Rep. Doug Barnard, D-Ga., an advocate of expanded banking powers, said, "I feel that a different direction will be taken next year."
Meanwhile, in the Senate, Banking Committee staff director Kenneth A. McLean said a strategy by Chairman William Proxmire, D-Wis., to bypass the jurisdictional tangle in the House is all but dead.
Proxmire had hoped that re-passing the Senate bill approved in March and attaching it to an unrelated banking bill would have given his counterparts in the House a vehicle to circumvent Dingell.
However, his plan was thwarted by Sen. Alfonse D'Amato, R-N.Y., a strong advocate of the securities industry's views. He threatened to tie up the bill in lengthy debate.
The deadlock means nearly two years of maneuvering and hearings have fizzled with no result.
The Senate, with only two members including D'Amato voting `no,' passed legislation in March broadly expanding banks' securities powers and named it after Proxmire, who is retiring after 30 years in the Senate.
The banking industry, which strongly supported the Senate bill, began to lose interest when St Germain in July added pro-consumer provisions bankers considered too expensive, including requirements that banks cash government checks for non-customers and provide low-cost checking accounts for poor people.
Dingell's version, adopted by his committee three weeks ago, was even less appealing to banks and would not, as St Germain's bill would, permit bank underwriting of corporate bonds and mutual funds.