The Lobbyists: Great Western Chief Pushes Bank-Thrift Summit on Bailout

Eager to end the war of wills over the thrift insurance fund bailout, Great Western Financial chairman James Montgomery was talking compromise with some big-bank CEOs last week.

His plan: sit down over a weekend and hash out a deal on merging the bank and thrift charters and combining their deposit insurance funds. With banks and thrifts united, they would be in a better position to fight for a charter with broad powers, he told the bankers.

"We already know what we want. If banks and thrifts reached a deal, we could circle the wagons," said one bank lobbyist familiar with the Mr. Montgomery's overture.

According to sources, he tapped Hugh McColl at NationsBank, David Coulter at BankAmerica, John McCoy at Banc One, and Charles Rice at Barnett Banks. Despite initial interest from bankers, efforts to set up an industry summit were put on hold Friday when House Banking Committee Chairman Jim Leach surprised everyone by announcing the committee would vote on his Glass-Steagall reform bill this week.

Banks have shot down repeated attempts by Republican leaders and the Clinton administration to pass the thrift fund bailout, which would force them to ante up $600 million a year through 2017 to help cover outstanding bonds used to bail out the thrifts in the late 1980s.

For their part, thrifts would pay a one-time assessment of roughly $5.5 billion, which would replenish their undercapitalized insurance fund.

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Banking trade groups are still demanding big changes in insurance provisions attached to Rep. Leach's Glass-Steagall repeal bill, but the Independent Insurance Agents of America is clinging to hope that the legislation will pass Thursday's committee vote intact.

The agents have put in a last-ditch appeal to Rep. Leach to preserve the powers of state insurance regulators.

"It's time for the banking industry to shun greed, put pettiness aside, and support this legislation," wrote Robert Rubuldt, vice president of federal affairs for the agents group, in a May 29 letter to the Iowa Republican.

Despite support from the group, the bill is a big disappointment to agents, who hoped to rein in an Office of the Comptroller of the Currency eager to grant new insurance powers to banks. But a little protection is better than none, said Paul Equale, the IIAA's senior vice president for government affairs, in an interview. "We like this bill, but it's just marginally better than the status quo," he said Monday.

To gain insurance industry support, the bill makes state insurance commissioners the primary regulator for national banks' insurance sales. Also, existing insurance products not allowed by the Comptroller's Office as of Jan. 1, 1996, remain off limits to national banks.

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With congressional races ready to heat up, bankers are playing a big role in campaign funding. During the first three months of 1996, the top 10 bank political action committees contributed $2.3 million to House and Senate campaigns, according to the Center for Responsive Politics.

Republicans were the big winners in bank contributions, snaring $1.61 million from the top 10 bank PACs.

Leading the way was the American Bankers Association, which contributed $569,000. Rounding out the top five were NationsBank, with $273,000; J.P. Morgan, with $254,000; Citicorp, with $239,000; and Barnett Banks, with $201,000.

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