Bankers, brokers and insurers expressed mixed feelings Thursday about a House-passed bill that would allow them to reach further into each others’ businesses–but with new strings attached.
“I want to address the full needs of our customers, but not to take on additional regulation that would be confusing and more burdensome than what we have now,” said Jeffrey W. Taylor, chairman of Cole Taylor Bank, based in Wheeling.
Most observers saw little chance that the Senate would move this session to pass the measure, which squeaked through the House by just one vote Wednesday night. President Clinton, moreover, has said he would veto the bill in its present form.
“Everybody I’ve talked to says the bill will be dead on arrival in the Senate,” said Edward Yingling, chief lobbyist for the American Bankers Association.
Senate Banking Committee Chairman Alfonse D’Amato (R-N.Y.) pledged Thursday to work with the Treasury Department to improve the measure, which was opposed by most large banking organizations, including the ABA.
Although D’Amato said his committee will hold hearings on the bill, he gave it little chance of passing without broad, bipartisan support.
“We’re pleased the House has finally dealt with the issue of financial-services modernization and hope the Senate will deal with those that still need further work,” said John Currie, senior vice president and head of government relations at First Chicago NBD Corp.
Yingling noted that many House members, particularly Republicans, switched from opposing the bill or being non-committal to vote for it after they saw the tally running neck and neck in the final minutes.
The lobbying also found First Chicago and Banc One Corp., which recently announced a merger agreement, on opposing sides, Yingling said. Banc One was listed among 10 major banks favoring the bill, while First Chicago had objections.
One of the ABA’s main objections to the measure, Yingling said, involves a provision requiring that banks offer special products to lower-income groups. “Our worry is it could grow into a regulatory nightmare,” he said.
The bill also would restrict non-financial firms from forming a thrift, but not prevent them from buying an existing one, Yingling said.
It also would undermine the ability of the U.S. comptroller of the currency, he said, by delegating some insurance matters to state agencies.
David Komansky, chairman of brokerage giant Merrill Lynch & Co., called the vote “an historic breakthrough for American consumers and our nation’s financial customers.” A Merrill Lynch spokesman predicted the Senate would take quick action on the measure.
But Kenneth Skopec, chairman of MidCity Financial Corp., a Chicago-based bank holding company, said “it doesn’t do an awful lot for most organizations other than the multi-multibillion-dollar concerns” such as Citicorp and Travelers Group, which have agreed to merge and create a huge financial-services complex. Under the present law, the combined firm would have to divest itself of Travelers’ insurance underwriting business after three years.
“We should think this situation out very carefully,” Skopec said. “There is an awful lot of competition building in the world. But we’ve got to be careful and not do things too quickly, or we may wind up with a huge monster that could come back to haunt us.”
Robert J. Glickman, chairman of Corus Bankshares Inc., said the bill “is a non-issue to me. We don’t plan to get into the insurance or securities business. I think they would take a high degree of skill to do well.”
