Chase Manhattan Corp. and several other large banks have decided to fight the House financial reform bill after their compromise proposal was rejected by lawmakers.
"We all now oppose the bill," said L. Thomas Block, Chase's chief lobbyist. "We were really disappointed. ... We thought we were being flexible."
The House is scheduled to begin debating the bill today.
Fleet Financial Group, First Union Corp., Mellon Bank Corp., and Norwest Corp. had joined Chase in late April to propose an alternative plan that would have eased the bill's limits on bank insurance sales. Two other banking organizations, Wachovia Corp. and Amsouth Bancorp, joined the group last week.
House Republican leaders and the Banking Committee rejected the compromise because it would have been opposed by Rep. John Dingell, D- Mich., Mr. Block said.
Financial reform bill supporters were shocked to learn that NationsBank Corp. lobbyist J. Mark Leggett will be on vacation in London when the House begins debating the financial reform bill today. NationsBank is one of the few banking organizations supporting the bill. Mr. Leggett declined to comment Monday except to say that he will be "working the bill as aggressively as possible."
Sources said Mr. Leggett had committed to the trip with his wife long before the House vote was scheduled for this week. He is expected to stay in touch by phone, and NationsBank will have a team of lawyers monitoring the vote.
At the recent Conference of State Bank Supervisors annual meeting in Nashville, a panel of Capitol Hill staffers panned the banking industry's lobbying efforts against credit unions.
Bankers did not win favorable legislation in the Senate Banking Committee or the House, the staffers said, because they were nearly invisible and lacked a clear message.
"When you talked to the members' offices, they would all say, 'We are not hearing from the bankers,'" said Laurie Schaffer, a House Banking Committee staff member.
By contrast, credit unions swamped them with faxes and phone calls, staked out the congressional hallways, and leaned hard on lawmakers in private meetings.
"The credit unions made the Christian Coalition look disorganized," said Lendell W. Porterfield, banking legislative aide for Sen. Richard C. Shelby, R-Ala. "They were amazing."
Kristi E. Walseth, a Rules Committee staff member for Rep. Martin Frost, D-Tex., likened the banking industry after its Feb. 25 Supreme Court victory over credit unions to a dog that chases a car and does not know what to do once it catches it.
"There was not a legislative response prepared and ready to go" to prevent Congress from reversing the court decision, she said. The banks' eventual proposal was "too little too late."
Edward L. Yingling, chief lobbyist for the American Bankers Association, disputed the criticism, noting bankers unveiled a legislative proposal in early March. "To say we didn't have an alternative or were not visible is absurd."
But conservatives cringed at the banking industry's calls for imposing taxes and community reinvestment requirements on credit unions, Mr. Porterfield said. "This is a Republican Congress that is against taxes," he said. "We are not going to put that on our worst enemies."
Wachovia Corp. recently hired E. Greer Amburn, a former legislative aide and national campaign finance chairman for Sen. Jesse Helms, R-N.C., as its new chief lobbyist. Most recently she served as a floor assistant for Senate Majority Leader Trent Lott. She succeeds Russell L. Stephenson Jr., who retired in January.
