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Late-night compromise reached on banking reform bill
October 22, 1999 WASHINGTON (CNN) -- The White House and congressional negotiators reached agreement early Friday on compromises that clears the way for passage of major legislation overhauling banking and financial services laws. Clinton Administration officials said they won agreement on a provision that can block mergers of banks that cannot prove they comply with the Community Reinvestment Act, which requires banks to provide loans and other services to poorer and underserved areas.
A key demand of the lead Republican negotiator, Texas Sen. Phil Gramm, chairman of the Senate Banking Committee, was regulatory relief for smaller and rural banks. Gramm is a longtime critic of the 1977 law and has blocked efforts to expand its reach in the new legislation. An administration official who told CNN of the compromise said the White House "didn't yield to everything Sen. Gramm wanted on regulatory relief, but there were concessions made that facilitated the agreement." The compromise includes requirements that banks wishing to expand into other areas of financial activity have a satisfactory rating from federal examiners on their community lending and also maintain the rating. The administration insisted that this provision be left in the bill. But the bill also includes a provision proposed by Gramm that requires community groups receiving money from banks under federal law disclose how they spent the money. In a compromise, such disclosure would be required only for loans of more than $50,000 and most grants of more than $10,000. The Community Reinvestment Act has been credited by the Clinton Administration with having boosted the renewal of inner-city areas in recent years. Key Democratic constituencies also support the law. "There are communities that are moving forward now because (the Community Reinvestment Act) ... was the economic engine," Rep. Bobby Rush (D-Illinois) said during debate on Gramm's proposal in the drafting session. The thrust of the measure is to repeal Depression-era laws that have made it difficult for banks to enter the insurance and securities business. The proposed law would allow banks, brokerage firms and insurance companies to merge and sell each other's products. It had appeared as recently as Thursday morning that there would be no legislation this year because of Gramm's differences with the administration. But talks resumed Thursday, and agreement was reached early Friday. "I am for the first time optimistic that we will pass, after a long time, financial services legislation," said Sen. Charles Schumer (D-New York). "In 19 years, we are the closest we have ever been to actually achieving a bill." Final approval of the legislative package by the negotiators could come in the next few days. It would lift Depression-era legal barriers and allow banks, brokerage firms and insurance companies to merge and sell each other's products. Wall Street and the banking and insurance industries have spent millions of dollars in recent years lobbying for the financial overhaul legislation. The industries believe consumers would benefit from the changes by allowing them to provide one-stop financial shopping. This year Congress has come closer than ever to enacting legislation, but industry lobbyists had watched the prospects slip away in recent days as the administration officials, Gramm and other key Republican lawmakers struggled to reach an accord. But the financial overhaul bill has been criticized by consumer advocates and lawmakers pushing for stronger consumer privacy protections. They have urged Clinton to veto the legislation. "We have the issues of poor people and privacy left over because all the big boys have already gotten what they want," said Rep. Edward Markey (D-Massachusetts) CNN's John King and The Associated Press contributed to this report. |
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MORE STORIES:Friday, October 22, 1999
• Lott tax bill would make business research credit permanent • GOP leaders would cut federal agency spending by 1.4 percent • Democratic panel refuses four states' requests to move up primaries • Bush backs abortion restriction, but points to other issues • Louisiana votes on governor Saturday • Buchanan memos from the 1970s foreshadow 2000 politics • Bush backers populate group running ads against Democrats • Sen. Boxer takes on Lott over judicial nominations • House passes education plan for poor without vouchers • Publisher recalling controversial Bush book • Late-night compromise reached on banking reform bill • The White House budget negotiator: Partisan, but flexible | |||||||||||||||||||
