Sarbanes helped shape banking bill

He was able to prune and add provisions at odds with Gramm

November 05, 1999|By David Folkenflik | David Folkenflik,SUN NATIONAL STAFF

WASHINGTON -- As the Senate passed landmark banking legislation yesterday, the influence of Sen. Paul S. Sarbanes of Maryland -- a pivotal figure on banking issues -- could perhaps be best seen by what wasn't in the bill.

Throughout negotiations between congressional leaders this fall, Sarbanes, the senior Democrat on the Senate banking committee, has battled repeatedly -- and often cantankerously -- with Sen. Phil Gramm, the Texas Republican who is the panel's powerful chairman.

But there Sarbanes was yesterday afternoon, standing at a Capitol Hill lectern next to Gramm, as they praised one another for accomplishing what Congress previously had failed to do despite years of efforts: repeal Depression-vintage restrictions that limit the banking, securities and insurance companies' entry into each other's fields.

The House also is expected to approve the bill by an overwhelming majority.

Gone from the final legislation were several Gramm proposals that had sparked Sarbanes' ire. The conservative Texan had pushed hard for a provision that would have largely exempted banks with less than $100 million in assets from meeting requirements to make loans in distressed areas.

Gone, too, was a provision that consumer advocates said would have prevented states from requiring stricter confidentiality of customers' data.

And other measures important to Sarbanes were included in the final bill, such as stronger rules preventing nonfinancial corporations -- like manufacturers -- from owning banks or insurance houses.

The compromises that led to the final bill could not have been struck, several senators said, had not Sarbanes held the Democrats together to vote against Gramm's initial bill on the Senate floor. The 44 votes against that bill showed that the Democrats could sustain Presidential Clinton's promise to veto the banking overhaul if Republican leaders did not acknowledge major Democratic concerns.

"Without [Sarbanes'] leadership and that unity, we wouldn't have been able to get the compromises we needed," said Sen. Evan Bayh, an Indiana Democrat on the banking committee. "He kept us together."

In perusing his interests on the committee, Sarbanes, 66, often finds himself squarely at odds with Gramm. Sarbanes has aggressively sought increased spending on mass transit projects and public housing.

And he has been almost alone in his continued criticism of the Federal Reserve Board for raising interest rates to ward off inflation, which he says constrains job growth. Other lawmakers, including many Democrats, credit those policies with helping sustain the nation's rosy economy.

On the banking overhaul issue, Sarbanes and the other congressional Democrats who were negotiating with Republicans to reconcile the differing House and Senate bills made concessions of their own.

For example, Sarbanes lost his bid to require companies to seek the consent of consumers before they share financial data with their corporate siblings for possible sales pitches. A few senators, including Sen. Barbara A. Mikulski of Maryland, Sarbanes' Democratic colleague, voted against the bill partly over that issue.

But Sarbanes said Democrats had wrung out what concessions they could, given the Republican majorities in both houses.

"This thing was by no means foreordained," Sarbanes said yesterday. "I was willing to keep working at this thing and keep pushing to see if we couldn't bring it around."

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