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Bloomberg: "Bank Bill Talks Down to One Issue: CRA"
>Date: Tue, 19 Oct 1999 16:40:53 -0500
>Subject: Bloomberg report on Deform negotiations from this afternoon
>Bank Bill Talks Down to One Issue: Community Lending
>Washington, Oct. 19 (Bloomberg)
> -- The Clinton administration and Republican sponsors are pushing to
>clear the last obstacle to a measure that would mark the biggest rewrite of
>banking laws in 66 years.
>U.S. Treasury Secretary Lawrence Summers, following closed- door discussions
>that stretched to midnight, resumed talks this morning with Senate Banking
>Committee Chairman Phil Gramm over rules for community lending.
>The stakes are high for Citigroup, Merrill Lynch & Co., Aetna Inc. and other
>financial services firms that regard the bank bill as their main priority in
>Washington. The bill would allow banks, securities and insurance firms to
>combine, and could trigger a wave of mergers within the insurance industry.
>Without an agreement between Gramm and Summers, President Bill Clinton has
>promised to veto the bill on the grounds that it lacks adequate protections
>for the 1977 Community Reinvestment Act, a law that compels banks to lend to
>Gramm sought to ratchet up the pressure by warning that time is running out.
>``We're going to have to make a final decision today,'' Gramm told reporters
>during a break in the talks, which have now resumed. ``At some point you
>have to stop discussing and start saying yes.''
>Gramm killed the bank bill last year over the lending issue and hinted he
>wouldn't mind just waiting for a Republican president to get elected. ``I
>know I can write a bill with the Bush administration,'' Gramm said. ``It will
>be a very different bill.''
>House Banking Chairman Jim Leach offered a slightly more optimistic view,
>saying the talks had yielded ``slow progress.'' Summers declined to comment.
>Privacy Issue Resolved
>Last night, House and Senate negotiators resolved another dispute over
>financial privacy over which Clinton had also threatened a veto. Today, White
>House spokesman Joe Lockhart said the language agreed to last night on
>privacy amounted to a breakthrough. ``We have made some progress, and that's
>important,'' Lockhart said.
>The House-Senate committee adopted a plan to give individuals the right to
>block transfers of their information to unrelated third parties. It contains
>an exception that would allow banks to share information with outside
>businesses that market products and services for the bank. The plan,
>sponsored by Republican Representative Michael Oxley of Ohio and Marge
>Roukema of New Jersey, is similar to privacy language the House passed
>earlier this year.
>The privacy agreement allowed negotiators to focus on the Community
>Reinvestment Act, a law that requires banks to make loans in neighborhoods
>where they gather deposits. Gramm contends community activists abuse the law
>by ``extorting'' banks to make multimillion dollar lending pacts for poor
>communities to prevent the groups from protesting mergers. Community groups
>can ask the Federal Reserve to block bank mergers if a bank has a poor CRA
>record, although the Fed rarely does this. Gramm killed the bank bill last
>year in the Senate because he contended it unduly expanded CRA.
>Clinton considers the law an important element of inner-city economic
>development, as do African-American politicians, and promises to veto the
>bill if it curtails the law.
>Gramm today said the Clinton administration objects to two CRA items in the
>current bill. One is a ``sunshine'' provision requiring disclosure when banks
>make cash payments to community lending groups in exchange for stopping
>merger protests. The other would extend the time between CRA exams at small
>and rural banks to five years from the usual range of 18 months to three
>The Texas Republican told reporters that Summers rejected his offer to insert
>a clause stipulating that the bill doesn't repeal any current CRA law.
>``They're moving the marker,'' Gramm said.
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