Final passage of a landmark bill to overhaul financial services hit a snag yesterday as Senate Banking Committee Chairman Phil Gramm (R-Tex.) and the White House bickered over two words in the legislation, though both sides said they thought the legislation would be voted into law this week.
The words involve how much community groups that receive money from banks would have to disclose publicly about travel expenses. Treasury Secretary Lawrence H. Summers believes the bill as it now stands requires too much detail and is burdensome to banks; Gramm thinks the language is fine.
Specifically, Treasury officials want this disclosure referred to not as a "detailed" and "itemized" list but with other words, such as "full accounting." But congressional and industry sources say Gramm has rejected that, as he last week rejected "full and comprehensive."
The nine Democrats on the Senate Banking Committee had not signed off yesterday evening on the bill, which is a compromise of two bills passed by the House and Senate earlier this year. The bill would make it easier for banks, insurers and securities firms to merge.
Gramm needs at least one Democrat on his side to obtain a majority of signatures from committee members, a requirement before the bill can go to the full House and Senate for a final vote. In the House, a majority of lawmakers who worked on the compromise bill already have endorsed it.
Gramm yesterday assembled lobbyists from American Express Co., Citigroup and other financial giants and urged them to push Senate Democrats into signing off on the bill, sources said. Gramm needs a Democrat because Sen. Richard C. Shelby (R-Ala.) has refused to sign the bill, citing what he says are its inadequate consumer privacy protections.
Gramm told lobbyists that without a supporting Democrat, he would have to try to work out a deal with Shelby, which would mean changing the privacy provisions of the bill. Banking executives say they would rather have no bill than one containing the privacy protections Shelby favors.
Although it seemed last night that Gramm's wording was likely to win out in the end, White House sources said they think bank regulators can interpret that wording to the administration's liking.
CAPTION: Sen. Phil Gramm balks on wording.