On to the 108th

EDITORIAL Comment

Will the new Congress be banker--friendly?

Banking industry lobbyists will have full plates when the 108th Congress convenes after the first of the year. Although one issue of more than passing interest to bankers - terrorism reinsurance - was squared away in the lame duck session after the November elections, the 107th Congress left some biggies hanging - most notably FDIC reform, bankruptcy reform and the question of banks having authority to deal in real estate.

Many observers see the Republican gains in the House and Senate as positive for banking's agenda. The majority party sets the program, but the majorities are slim in both houses and only time will tell if this Congress is more banker-friendly than the last.

Take FDIC reform. Passed overwhelmingly by the House in a form mostly acceptable to the American Bankers Association and the Independent Community Bankers of America, the issue stalled in the Senate with opposition to a major component - increasing the insurance ceiling to $130,000 per account - from the Secretary of the Treasury, Federal Reserve Chairman Alan Greenspan and the ranking Republican on the Banking Committee, Sen. Phil Gramm of Texas.

Gramm has retired, of course, and the top Republican on the committee is its soon-tobe new chairman, Sen. Richard Shelby of Alabama. Like Gramm, he is opposed to raising FDIC insurance to $130,000, as is the top Democrat, Sen. Paul Sarbanes of Maryland and Sarbanes-Oxley Act fame. So there's one tough nut to crack for the lobbyists. It's hard to see the agreed-upon reforms staying together as a package.

How about bankruptcy reform? Larger Republican majorities ought to improve chances for adoption, but they may not be large enough to get past the emotional hangup over bankruptcy options for abortion clinics.

On another hot button issue the odds definitely seem to be stacked against bankers. Sen. Shelby co-sponsored the National Association of Realtors' legislation to bar the Treasury and the Fed from letting banks into real estate brokerage, in spite of enabling legislation in the Gramm-Leach-Bliley Act. "If he (Sen. Shelby) chooses to move the Realtors' bill aggressively," warns the ABA Government Relations staff, "there could be a real problem for us on this issue."

If that's not enough, Sen. Shelby and Sen. Sarbanes are both in favor of stronger privacy rules for the financial services industry and will likely pursue legislation on this issue, according to ABA and the Conference of State Bank Supervisors. And Sen. Shelby is reportedly a supporter of the credit union lobby.

The good news may be that not much change is expected by these trade groups in the House Financial Service Committee's agenda. Rep. Michael Oxley (R-Ohio) remains in charge and will probably continue to seek FDIC reform, according to the CSBS. The ranking member in the 107th Congress, Rep. John LaFalce (D-N.Y.) retired and has been succeeded by Rep. Barney Frank (D-Mass.). The two have similar views, say ABA and CSBS. Both Congressmen were strong supporters of Gramm-Leach-Bliley and both are high on consumer protection issues.

So, the banking industry has some pretty big battles facing it in the 108th Congress. The point here is not just the lobbyists have their plates full. They are going to need all of the help they can get from the grass roots and that means you, dear reader, and your officers, directors and employees. And maybe you can recruit customers for the cause as well - like credit unions do.

Bill Poquette

Editor

[Sidebar]

"The majority party sets the program, but the majorities are slim in both houses and only time will tell if this Congress is more banker-- friendly than the last."