Banks Win Passage Of Limited Regulatory Relief Measure.

Navigation: Main page

Author: Swindell, Bill

Finance

The Senate Banking Committee approved by voice vote today a narrowly tailored bill that would offer regulatory relief to banks, thrifts and credit unions. The measure, sponsored by Sen. Mike Crapo, R-Idaho, was the result of hard-fought lobbying by industry lobbyists, regulators and consumer activists. The House passed its companion bill in March on a 415-2 vote. The Senate bill would allow credit unions to provide check-cashing, money order and wire transfer services for anyone eligible to become a member; strengthen authority of state regulators over banks they charter; and allow community banks with up to $500,000 in assets to be eligible for a more flexible exam schedule from the FDIC. But Crapo also noted that he had to jettison contentious provisions that drew objections from other senators. For example, Crapo said he would have liked to include language similar to a House provision that would exempt institutions from rules on reporting cash transactions with their seasoned customers. Under current law, financial institutions have to report any cash transaction of more than $10,000, with the data used as tool by investigators to track such activities as money laundering or terrorist financing. But some senators sided with law enforcement concerns that such language could aid criminals. Instead, the Crapo bill would authorize a GAO study on the volume of cash transaction reports filed with the Treasury Department and provide recommendations for any changes. "I think this is a measured approach given the testimony we heard from FBI, Immigration, Customs enforcement officials," said Banking ranking member Paul Sarbanes, D-Md. Crapo said he will have to settle any potential contentious amendments before Majority Leader Frist will allow it on the Senate floor. "There are dozens of issues that could be raised, and we have worked through this in a way that gives us results. We got stay to stay results-oriented," Crapo said.

Sen. Tim Johnson, D-S.D., said he wanted the bill to include a House provision that would restrict a newly chartered industrial loan corporation from operating branches across state lines if its parent is not primarily a financial services firm. The House language would restrict the growth of ILCs, which are state-chartered banks offering limited financial services in seven states. Banks are concerned about the influence of the ILC industry, especially after Wal-Mart Stores Inc. has applied to the FDIC for an ILC charter to reduce costs of processing credit and debit card transactions. Senate Banking Financial Institutions Subcommittee Chairman Robert Bennett, R-Utah, opposed the House provision, as ILCs are part of a growing industry in his home state. Sen. Christopher Dodd, D-Conn., said he wanted a provision that would have authorized a study on the fees that banks charge merchants for credit card transactions. Retailers claim some credit card companies engage in monopolistic practices by charging stores a fee of about 2 percent for each transaction when a customer uses plastic. Sen. Thomas Carper, D-Del., also noted that Arkansas lawmakers were pushing for a provision that would allow non-bank lenders headquartered in their state to charge higher interest rates beyond the state's usury cap. That issue may have to be settled before the bill can reach the floor. Meanwhile, House Financial Services Chairman Oxley told Reuters he would consider taking the Senate's version of the bill if the Senate approves it as is. "If it is pretty much what it is now, we may very well just go ahead and take it," he said. "I'm not going to break my pick on that one."

~~~~~~~~

By Bill Swindell