Senate Panel OKs Banking Bill

The Senate Banking Committee voted 16-2 Friday morning to pass a comprehensive financial services modernization bill that stops commercial firms from acquiring unitary thrifts and provides small banks with easier access to the Federal Home Loan Bank advance window.H.R. 10 would allow affiliations of banks, securities firms, and insurance companies for the first time, and clear the way for a proposed mega-merger of two New York financial services -- Citicorp and Travelers Group. But to get the American Bankers Association and Independent Bankers Association to support the bill, the committee approved provisions that prohibit the sale of unitary thrifts to commercial firms after Sept. 3. However, existing unitaries can engage in new commercial activities under a compromise brokered by Sen. Robert Bennett, R, Utah. "In the interest of moving the total legislation package, we have come to this compromise," said Senate Banking Committee Chairman Alfonse D'Amato, R, N.Y. The Senate version of H.R. 10 also includes several FHLB reforms proposed by Sen. Chuck Hagel, R, Neb. These reforms provide for voluntary membership for thrifts, converts the annual $300 million Resolution Funding Corp. obligation to 20.75% of FHLB earnings, and makes access to FHLB advances easier for small banks with less than $500 million in assets. H.R. 10 goes to the Senate floor next and, if it is approved, to a House-Senate conference. Chances of passage have improved, but there is little time left in this legislative session and the Clinton administration has not voiced support for the bill.