Capitol Account: Antiregulation Climate Chilling the Activists

WASHINGTON - The Republican-sponsored regulatory moratorium may never become law, but its effect is already being felt in this town.

Listen, for example, to Stephen Brobeck, executive director of the Consumer Federation of America - one of the groups that has given bankers fits over the years.

"It is foolish not to assess the cost and benefits of new rules before writing policy," he said in an interview this week.

That may not seem terribly radical to bankers, who have made the same argument for years. But in the world of consumer activism which Mr. Brobeck inhabits, cost-benefit analysis is a kind of heresy - code words used by business groups to trash regulations.

In fact, Mr. Brobeck has felt for years that cost-benefit analysis is important, but you might not have heard him talk about it before now.

What's changed, of course, is control of Congress. The regulatory moratorium legislation is just one of the signposts that make it clear the Republicans who run the House and Senate are ready - not just to hold the line on new regulations - but to roll them back.

The impact of the elections is being felt everywhere in Washington, from the federal banking agencies to the Department of Justice.

"It's quite clear that Justice has pulled back," said one trade group executive, referring to the civil rights division's prosecution of Chevy Chase Federal Savings Bank for failing to locate branches in minority communities.

"Before the election, this was a hot button across the industry," added the trade group executive, who asked not to be named. "It just isn't there any more."

Mr. Brobeck can read the tea leaves as well as anyone, and he believes the consumer lobby has to adjust if it is going to hold the ground it has won over the past few years.

Regulations that don't provide more benefits than they ring up in costs may not be defensible, he said, adding: "We are aware that we live in a society of finite resources."

That's not to say Mr. Brobeck wants to throw in the towel on bank regulatory issues. The moratorium worries him, not just for what it is, but for what it may become.

Even if President Clinton vetoes the Republican legislation, which passed a key House committee this week, "there is no question, the moratorium will have a chilling effect on the regulatory agencies," Mr. Brobeck said.

And he is concerned that the moratorium may just be the first step. Congress could follow it, he said, by heaping "impossible requirements on the regulatory agencies" and by watering down laws the group spent years fighting for, from Truth-in-Savings to the Expedited Funds Availability Act.

On that point, bank industry lobbyists agree with Mr. Brobeck.

"We're interested in the regulatory moratorium, but our main focus will be removing and amending specific laws," said Edward L. Yingling, the top lobbyist at the American Bankers Association.

At the top of Mr. Yingling's hit list are three major laws: the Community Reinvestment Act, the Truth-in-Savings Act, and the Truth-in- Lending Act.

On CRA, the ABA is looking for major changes. Mr. Yingling wants Congress to roll back proposed race and gender reporting requirements, reduce paperwork, and provide a safe harbor that will protect banks with satisfactory ratings from CRA challenges.

Likewise, he would like to see major changes in Truth-in-Lending and one related law, the Real Estate Settlement Procedures Act. Both laws add to the paperwork of making loans, he said.

On Truth-in-Savings he wants something more. "We wouldn't mind seeing it repealed," he said.

That's something that the consumer lobby is likely to draw the line on. It remains to be seen whether the various groups, from the Consumer Federation to the more radical Association of Community Organizations for Reform Now, have any firepower in the Republican era, but they won't sit back silently while Congress dismantles laws they spent the better part of a decade fighting for.

Still, with Republicans determined to loosen the reins of government, a moratorium might soon seem like a blessing to Mr. Brobeck and his allies.

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