After 12 years of Republican rule, the first two years of Bill Clinton's presidency have been like a trip to the candy store for the nation's banks. Regulatory relief? You got it. Interstate branching? No problem. Glass-Steagall repeal? Let's save something for next year, all right?
By contrast, the Bush years were more like a visit to the dentist's office -- without novocaine. The thrift bailout was a neCessary evil, but it poisoned the legislative environment for banks and thrifts.
That was followed by the 1991 banking law, probably the most reviled piece of banking legislation in decades. And lest anyone forget, tile Justice Department s fair-lending campaign actually began during the Bush years with the prosecution of Decatur Federal Savings and Loan.
So why is it that many bankers think they'll be better off if the Republicans win big, as expected, in Tuesday's midterm congressional elections? A cynical observer might conclude it's just the latest example of the induStry's penchant for self-destructive behavior -- on a par with the commercial real estate lending hinge of the 1980s.
But it may also reflect a shrewd and somewhat Machiavellian insight into congressional politics.
After all, bankers keep President Clinton for two more years, no matter what happens Tuesday. And it may be that they've already gotten the best the President has to give.
President Clinton and his appointees came into office, promising regulatory relief and offering support for other industry initiatives such as interstate branching. By and large, the administration delivered on those promises.
Lately, though, bankers are seeing a different side of the Clinton administration as the Department of Justice expands its definition of lending discrimination to include institutions that fail to locate branches in low-income communities.
The Justice Department's initiative has left the industry confused and frightened -- and in search of some friends.
Republicans, the professed enemies of big government and big regulation, are the industry's natural allies in this fight. And the larger their numbers are on Capitol Hill, the better off the industry may be.
Right now, the big battle is raging within the administration. Jonathan Fiechter, director of the Office of Thrift Supervision, publicly criticized the Justice Department's fair lending initiative, and other officials share his views.
Congressional Democrats struck back quickly. Last week, one of Capitol Hill's barons, House Government Operations Committee chairman John Conyers Jr., D-Mich., fired off a letter demanding reams of documents related to Mr. Fiechter's criticism. It was the type of letter committee chairmen write to intimidate regulators.
Committee chairmen can bring considerable pressure on agency heads, by summoning them to hearings, threatening them with legislation, or deluging them with requests for documents. Regulators pay close attention to the mood on Capitol Hill and modify their behavior accordingly. If the Democratic barons are replaced with Republicans come January, there would still be letters and oversight hearings. But it might be officials at the Department of Justice, rather than the OTS, who find themselves under fire.
That's not to say that bankers should take Republicans for granted. It was a Democrat, Massachusetts Rep. Joseph P. Kennedy 2d, who sponsored the law that requires disclosure of home lending data. But it was a Republican, conservative firebrand Robert Walker of Pennsylvania, who made the crucial floor speech that swung the vote in favor,of Rep. Kennedy.
Still, on issues involving new regulations, an enlarged Republican presence will favor bankers nine times out of 10.
And change could benefit the industry on other issues as well. The primary obstacle to Glass-Steagall repeal is Rep. John D. Dingell, the Michigan Democrat who runs the House Energy and Commerce Committee with an iron hand.
Should the GOP pick up at least 25 House seats in Tuesday's balloting -- 15 shy of a majority -- the ratios of Democrats to Republicans on committees will shift markedly and Rep. Dingell could find his control over Energy and Commerce much diminished.
