The House Banking Committee reported out its version of financial modernization legislation late March 23, and the House Parliamentarian apparently granted the House committee a 45-day sequential referral to May 14, obviously slowing the momentum for the bill its supporters are trying to create.

That would doom efforts to deal with the bill in May on the House floor, as optimists had sought. And, in the Senate, Sen. Phil Gramm, R-Texas, chairman of the Senate Banking Committee, told lobbyists at the second meeting in a week that Sen. Trent Lott, R-Miss., majority leader, had asked to meet with him, and Sens. Tom Daschle, D-S.D., minority leader, and Paul Sarbanes, D-Md., ranking minority member of the Senate banking panel, when Congress returns in April.

The purpose of the meeting, Gramm said, is to see what could be done to resuscitate Gramm’s version of the bill. His bill was passed 9-7 on a partisan vote in the Senate Banking Committee, and, as a result, had not been reported out of the committee as of March 25.

The ostensible objection of Democrats is Gramm’s efforts to water down the Community Reinvestment Act mandates imposed on banks. President Clinton wrote a letter promising a veto of the bill based on the CRA provisions in Gramm’s bill even before the panel voted on it.

But that is just the beginning of the bill’s problems. While not directly linked, signals from the Clinton administration are that it will demand that Congress improve financial privacy protections as part of a package of consumer protection provisions it supports. That would virtually end banking industry support for the bill, because ability to use its customer base to market non-banking products is one of the key reasons money center banks are still supporting the bill. In fact, at a meeting of bank lobbyists earlier this month, the Washington lobbyist for Chase Manhattan Bank specifically linked his institution’s support for financial modernization legislation to Congress’s ability to maintain current provisions on financial privacy.