WASHINGTON -- After 20 years of failed efforts, the House braced for a vote Wednesday on legislation to lift Depression-era barriers separating banking, securities and insurance.
The far-reaching measure is bitterly opposed by consumer activists including Ralph Nader, most of the banking industry and the Clinton administration, which contends it would favor big bank-holding companies at the expense of smaller banks.
The White House is threatening a veto.
But proponents held out the promise of a globally competitive U.S. financial industry, with consumers benefiting from one-stop "supermarkets" catering to all their financial needs. The new structures would stretch "from Wall Street to Main Street to Elm Street, from the cradle to the wedding to retirement," said Rep. Rick Lazio, R-N.Y.
With Democrats evenly divided, the House defeated an effort to allow banks to get into new businesses through their existing divisions. A 306-115 vote rejected an amendment by Rep. John LaFalce of New York, senior Democrat on the Banking Committee, that he contended would have helped smaller banks diversify in an intensely competitive marketplace.
Rejection of the amendment appeared to dim prospects for a softening of White House opposition to the bill.
The bill was boosted by a stunning new merger of banking giant Citicorp and brokerage-insurer Travelers Group, part of a recent outbreak of merger mania in various industries. The deal, valuing each company at $69 billion, put added pressure on Congress to revamp the nation's financial-services laws.
The Federal Reserve could allow the two financial powerhouses to operate as one under current laws, requiring some businesses to be sold off, for up to five years -- by which time Congress is widely expected to have enacted some kind of overhaul legislation.
Amid a barrage of lobbying by the financial industry, the House has debated for months the latest version of the legislation -- which divides top federal regulators, the industry and each of the political parties. The banking industry on one side and the securities and insurance industries on the other have been pouring millions into the campaign coffers of key lawmakers.
Six weeks ago, House Republican leaders, facing GOP defections as well as Democratic opposition, abruptly withdrew an earlier version of the bill before a vote. The new version contains some consumer protection provisions to meet objections by Rep. John Dingell of Michigan, senior Democrat on the Commerce Committee, and other concessions to opponents.
Company settlesThe potential dangers of new financial "supermarkets" became evident last week, when federal regulators announced that financial titan NationsBank Corp. was paying $6.75 million to settle charges it misled investors about the risks of government bond funds. The regulators said NationsBank had "blurred the line" between federally insured bank deposits and uninsured securities investments.