BANKING COMMITTEE OKS BILL; MOVE WOULD ALLOW COMMERCE MERGERS.

Byline: Marcy Gordon Associated Press 

The House Banking Committee narrowly approved a bill allowing sweeping changes in the nation's financial system, including the marriage of banks and commercial companies such as brokerages and insurers.

The bill, which some lawmakers opposed because of its possible negative impact on consumers, includes some protection for bank customers: Among other things, bankers must clearly disclose whether their financial products are federally guaranteed.

Friday's 28-26 committee vote cut across party lines. It came after 3-1/2 days of drafting work by the lawmakers, as lobbyists for an array of powerful financial industries thronged the committee room and the corridors outside.

``No, no, no,'' said Rep. Maxine Waters, D-Calif., as she voted against the legislation.

She won her push earlier for an amendment that would require banks merging with securities firms, insurers and other entities to provide no-frills, low-cost checking accounts to consumers of modest means. But she was stymied in her efforts for adoption of other measures focusing on consumers and poor neighborhoods.

Waters called the legislation ``a struggle between the big boys'' and cited the potency of lobbying dollars from the banking, securities and other industries.

Rep. Marge Roukema, R-N.J., one of the bill's authors, acknowledged the vote was closer than she had expected.

``The committee addressed the needs of both consumers and businesses,'' she said. ``This legislation allows our financial institutions to compete more effectively at home and in the global marketplace, and acknowledges the changes already under way.''

The panel sent the legislation to the full House, where prospects for passage were unclear. Congressional proponents and the banking industry have unsuccessfully tried for years to push such a package through Congress.

The Senate has not acted on a similar bill this year. Banking Committee Chairman Sen. Alfonse D'Amato, R-N.Y., has focused on other issues.

The House committee, going beyond the removal of Depression-era restrictions that bar banks, brokerages and insurers from getting into each other's businesses, adopted far-reaching measures earlier this week allowing banks and commercial companies to combine.

The latter actions came over the opposition of the committee's chairman, Rep. Jim Leach, R-Iowa, who nonetheless supported the final package in Friday's vote. Leach had warned that the banking-commerce mix could expose taxpayers to huge risk by giving commercial and industrial companies access to federal deposit insurance and other guarantees for banks.

``Not all parties could or should be fully satisfied,'' Leach said after the final vote. ``Each of us has reservations about parts of the bill.''

He said the measure will benefit consumers by increasing competition in this country for financial services ``while strengthening the global position of the American financial services industry.''

Continuing to press their overhaul initiative, the lawmakers voted Thursday to eliminate the separate charter and federal regulator for the savings and loan industry, which currently has more freedom to engage in commercial activities than banks.

That 42-4 vote approved an effective merger of the banking and thrift industries. It had been recommended by the Clinton administration and others as an adjunct to taking the radical step of allowing banks and commercial companies to mix.

Leach's concerns were echoed by consumer activist Ralph Nader, who urged the full House ``to put the toxic mixture of banking and commerce back in the bottle'' by rejecting the bill.

Groups representing consumers, the elderly, farmers, community groups and smaller banks have raised concerns about the legislation, contending it could bring about a concentration of economic power that could hurt consumers.

But the package's supporters insist the changes are needed because of upheavals in the banking and financial services industry.