Lobbyist's Job Is Working Himself Out of One

Samuel J. Baptista's job is secure for another year.

Despite his best efforts, the veteran lobbyist won't be standing in the unemployment line anytime soon, because House Banking Committee Chairman Jim Leach has dropped Mr. Baptista's sole project - breaking down the barriers that keep banks, securities firms, and insurance companies out of one another's businesses.

As president of the Washington-based Financial Services Council, Mr. Baptista has lobbied on behalf of 19 giants of the financial services industry, including Merrill Lynch, Bankers Trust, Citicorp, Providian, and American Express.

Mr. Baptista is far from discouraged that this Congress has dropped his pet project. Accustomed to Washington's glacial pace, he's encouraged because the ice floe is moving his way.

"You always have to bet against any kind of financial modernization bill passing," said Mr. Baptista.

Ever the optimist, the 44-year-old lobbyist said he expects a sweeping financial modernization bill within four years.

"We are now close to where interstate banking was when it went over the top. Interstate took 10 years to pass, and we are getting to the end of the gestation period for financial modernization as well," he said.

Yes, the council's membership - which also includes NationsBank, Dean Witter, and Household International - is frustrated by what seems a never- ending battle.

One reason the high-powered membership hasn't abandoned the council, sources said, it that the council wasn't created to be a Washington power broker. The council doesn't have a political action committee, and the group's say-so doesn't make or break any piece of legislation.

Instead, its mission is simply to keep financial modernization on the minds of lawmakers.

"I think Sam has done a remarkable job keeping the group together," said John G. Heimann, council chairman and a vice chairman at Merrill Lynch.

Also remarkable: The council stood by Rep. Leach, even though his bill would have forced all financial companies owning banks under the domain of the Federal Reserve - a move that most members opposed. The council's line is that some progress is better than none.

"We would support anything that moves the financial system forward," Mr. Heimann said.

Mr. Baptista credits the council's cohesion to its singular focus. "I think what our members have always wanted is for FSC to be a consistent voice. It's the only issue we've been working on, and we haven't gotten sidetracked by other concerns."

Certainly, Mr. Baptista is surprised he's still heading a group that was meant to be short-lived. "I've always thought of this as a temporary organization. I'm kind of anxious to work myself out of a job," he said. Should Congress allow the broad industry integration the council advocates, the group will disband.

Mr. Baptista's fight for financial modernization predates the the council. He founded the council as an outgrowth of the Mayflower Group, an informal amalgamation of banks, securities firms, and trade groups fighting to preserve the nonbank loophole. During the mid-1980s the group tried to protect the law, which allowed commercial firms to own banks as long as they did not offer both checking accounts and commercial loans. In 1987, lawmakers forbade the creation of new so-called nonbank banks, but the 23 already in existence were allowed to continue.

At the time he was the top lobbyist for the American Financial Services Association. He realized that banks fighting for more powers and nonbanks pushing to get into the industry really had the same goal - eliminating the barriers between industries.

"I looked at the nonbank fight as a modernization issue, and my notion at the time was to put together companies that were pro-competitive," he said.

"Here were industry groups fighting each other tooth and nail, and we said: Maybe there's more in common than people think."

During his 20-year lobbying career, Mr. Baptista has worked for banks and for their financial services rivals, making him an excellent choice to head the council's contentious membership, said Douglas Kidd, a lobbyist for Bankers Trust Corp. and the company's representative to the council.

"The segmentation of the financial services industry over the last 50 years has resulted in advantages and disadvantages for each sector. It's not surprising that each group wanted to maintain their advantages while having access to the other guy's," Mr. Kidd said.

"He has been what this job needed. He has a great deal of perseverance in bringing these groups together," he said.

Before joining the American Financial Services Association in 1985, Mr. Baptista was a lobbyist for Visa for three years. He also lobbied for the American Bankers Association from 1975-1979, and his duties included being a liaison to community banks.

Ironically, the Independent Bankers Association of America, the community bank trade group, is one of his toughest opponents. Afraid that corporate behemoths will monopolize financial services, the association vehemently opposes eliminating the walls between banking and commerce.

Mr. Baptista argued that community bankers would be better off to adapt, rather than to block integration needed by the rest of the industry.

"Community bankers are pro-competitive, but one of frustrations at the Washington level is they haven't come to the table with what they need to compete. Instead, it's always been stop the other guy," Mr. Baptista said.

Mr. Baptista said he soon may need to send out resumes after all. Key lawmakers are finally supporting the idea of letting companies enter any type of financial service.

After initially balking at expanding bank insurance powers, Rep. Leach gave in on an issue critical to the council - allowing common ownership of banks and insurance companies.

Going even further was Senate Banking Committee Chairman Alfonse M. D'Amato, who in February 1995 introduced legislation allowing any holding company to offer all financial services.

Mr. Baptista said he's glad to see that lawmakers are finally talking about ideas that the council floated a long time ago.

"When we first started this debate 10 years ago, Congress was still talking about limited bank-securities powers," he said. "We are finally getting to the point where people realize this is a financial services debate much more than it is a bank powers debate."

Stephen Blumenthal, a banking analyst with the Washington Research Group and a former Capitol Hill staffer, agreed that lawmakers are coming around to the council's point of view. "Sam is correct. Recognition is growing that financial-services reform cannot be modest reform and pass Congress. Reform has to be substantial and benefit all sectors," he said.

Recent moves by the Comptroller of the Currency to expand bank powers and Supreme Court rulings backing up the regulator have given more firepower to the council, Mr. Baptista said.

"Banks have a solid foothold in insurance," he said. "Any rollbacks will be unthinkable."

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