WASHINGTON -- Progress on sweeping bank legislation has become increasingly subject to political maneuvering in both houses of Congress, with floor action expected no sooner than September, congressional aides and banking industry sources say.
House Energy and Commerce Committee Chairman John Dingell remains in no rush to act on the banking reforms, and the Senate Banking Committee continues to refine the details of a bill that likely will be introduced next week.
The House Banking Committee June 28 approved a bill that would allow banks, securities or any other business company to reorganize into holding companies that could operate bank, insurance and securities subsidiaries.
The House bank panel bill would also allow well-capitalized banks to branch across state lines without prior state permission.
Congressional and banking industry sources say that Dingell, D-Mich., protecting his committee's jurisdiction over securities law, still prefers that Congress this year enact a bill that shores up the Federal Deposit Insurance Corp., which faces insolvency, and reforms deposit insurance enough to prevent further hemorrhage of the fund.
But these sources say that as Dingell told House Speaker Thomas Foley, D-Wash., in a June 6 letter, there is no hurry to expand bank powers, or to allow commercial and industrial firms to own holding companies that operate banks.
Banking industry sources see virtually no chance that Dingell will complete his review of the Banking Committee's reform bill before Congress recesses for a month in August.
Senate sources acknowledge that the bill produced by the Senate Banking Committee, like the House bill, would allow the FDIC to borrow $25 billion more from the Treasury Department to cover losses on the closing of failed banks, bringing the total FDIC borrowing authority to $30 billion.
But these source say that the details of the borrowing plan and the mechanism for the banking industry to ultimately repay the borrowings through FDIC insurance premiums are still being developed.