compromise

August 3, 1999

Dow Jones Newswires

Congress Begins Combining House, Senate
Fncl Svcs Bills

By DAWN KOPECKI

WASHINGTON -- In a ceremony known more for its pomp and
circumstance than for substance, lawmakers Tuesday began their work to
combine the Senate and House financial services legislation.

Many pointed out the historic significance of the meeting; it is the farthest
such a bill has come in more than two decades of debate in Washington. If
enacted, it would repeal the antiquated Glass-Steagall and Bank Holding
Company acts, which bar banks, brokerages and insurers from jumping
into each other's lines of business.

But most legislators used the opportunity to reinforce uncompromising
stands on several controversial issues on the bill that promise to drag out
the "conference" for several weeks and maybe even months, lawmakers
said.

"Obviously we've set about on a difficult task since there's been an effort
for the last 20 or 30 years to modernize" the financial service laws,
Senate Banking Committee Chairman Phil Gramm said. "If this was easy,
somebody else would have done it."

Several laborious issues divide support among the parties and among the
three Congressional committees and 48 lawmakers involved in the
negotiations.

For example, the question of how to regulate a future financial services
landscape has pitted Sen. Gramm, many on the House Commerce
Committee and Federal Reserve Chairman Alan Greenspan against
Banking Committee Chairman Jim Leach, the administration and several
key Republicans on Gramm's committee.

Leach, R-Iowa, and many of his supporters say they back a system that
gives the Treasury greater sway as the future regulator because they want
to pass a bill that the President will sign.

At the same time, Greenspan, Gramm and many on the House Commerce
Committee prefer a structure that gives the Federal Reserve greater say as
regulator. That's because they say a structure that uses the Treasury's setup
is dangerous for the nation's banking system.

The issue of protecting consumer privacy loomed large at the meeting. It
was an issue that has just only surfaced in recent weeks, and now it isn't
seeming to go away.

The Ranking Democrat on the House Banking Committee, Rep. John
LaFalce of New York, said that's because ordinary citizens can identify
with the issue.

"They are concerned about a telephone call they got last night in the middle
of dinner and they are concerned about all the information that person has
on them and how they got it," LaFalce said.

Sen. Gramm reiterated his position on privacy, pushing for lawmakers to
drop House privacy protections and deal with the issue in a separate bill
altogether.

That prompted Alabama Republican Sen. Richard Shelby, who was
Gramm's partner last year on community investment rules, to break from
him again on privacy issues. He also opposes the chairman on the bill's
regulatory structure.

"Some have suggested that we save financial privacy for another day. I
don't agree," Shelby said, adding that Congress needs to keep consumers
in mind when drafting the final bill. "We're not writing these laws to satisfy
those on Wall Street. They will get by no matter."

Lawmakers, many of which have worked on this legislation for several
years, weren't optimistic that the conference will produce a bill.

"I don't think it's a foregone conclusion that we can reach a compromise,"
Leach said.

Even if that happens, many seemed skeptical that the negotiators could
pass the President a bill he will sign.

"We need to pay careful attention to the administration because it's laid out
its position on several issues," Sarbanes said. "I don't think we want to go
through this process and confront a veto."

Throughout opening speeches, several lawmakers repeated the same
quote.

"No bill would be better than a bad bill."

Lawmakers directed their staffs to work on the bill over a month-long
Congressional recess that begins next week. House and Senate legislators
said they will then negotiate any unresolved issues when they return in
September.

-By Dawn Kopecki; 202-862-6637
(dawn.kopecki@dowjones.com)

Leach, R-Iowa, and many of his supporters say they back a system that
gives the Treasury greater sway as the future regulator because they want
to pass a bill that President Clinton will sign.

At the same time, Greenspan, Gramm and many on the House Commerce
Committee prefer a structure that gives the Federal Reserve greater say as
regulator. That's because they argue a structure that uses the Treasury's
setup is dangerous for the nation's banking system.

The issue of protecting consumer privacy loomed large at the meeting. It
was a topic that only surfaced until recent weeks and now isn't likely to go
away. The Ranking Democrat on the House Banking Committee, Rep.
John LaFalce of New York, contends the issue is likely to stay because
ordinary citizens can identify with the matter.