The banking industry faces a do-or-die test of its lobbying might today as it tries to stop financial reform and credit union membership legislation in the House.
The House Rules Committee was expected late Monday to attach the credit union bill-which would let these nonprofit institutions serve an unlimited number of small companies-to the broader financial reform bill. The House is expected to vote on the bill today.
House Republican leaders contend legislation protecting credit union membership expansion will draw votes to the controversial reform bill, which would permit banking, insurance, and securities firms to merge.
If banks and thrifts defeat the House bill, they will maintain their reputation as big-money companies with muscle on Capitol Hill.
But failure would be an embarrassing defeat on the industry's two most prominent issues of recent years and validate the Republican leadership's strategy of marginalizing the bank lobby with the political support of the insurance, securities, and credit union industries.
Leaders of the four major banking trade groups huddled Friday afternoon and pledged a united assault.
"This is a coordinated strategy," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America. "This is the first time that has happened in better than 10 years."
The battle is being fought on multiple fronts.
The American Bankers Association planned to fly in trade group executives and bankers from 34 states to lobby their congressmen this morning. The IBAA has brought in "hundreds" of community bankers from across the country in the past three weeks, Mr. Guenther said.
The ABA and IBAA spent more than $140,000 on advertisements in national and Capitol Hill newspapers Monday to combat the credit union bill.
And industry executives have besieged congressmen. "We have gotten hundreds of letters and phone calls," a Democratic staff member said.
Meanwhile, the Independent Insurance Agents of America had 800 agents lobbying on Capitol Hill last week, while Merrill Lynch & Co., the American Insurance Association, and the American Council of Life Insurance have been running many radio and print adds backing financial reform.
Indeed, banking industry leaders seemed to be preparing their members for a possible defeat in the House and predicted it would be easier to win in the Senate.
"We are fighting an uphill battle," said Edward L. Yingling, the ABA's chief lobbyist. Referring to other industry segments supporting the bill, he added: "I don't think anybody can fight four or five groups at one time."
"This is a marathon, not a 100-yard dash," said Robert R. Davis, government relations director for America's Community Bankers, the thrift trade group.
At its hearing Monday, the Rules Committee was expected to combine the two bills and decide which amendments could be considered on the floor.
Before lawmakers vote on the combined bill, they will vote on the Rules Committee's plan to join the two. Bankers are asking their allies to vote against the rule linking the bills, said Kenneth H. Rayborn, president of First Citizens Bank, Cleveland, Tenn.
"We can stop the financial modernization bill if we get it separated," said Mr. Rayborn, who has been lobbying Tennessee lawmakers since Sunday. "We know truthfully very few of them are going to vote against the credit union bill."
If the bills are linked, Democrats are expected to make a motion on the floor to strip the financial reform provisions out of the bill. Although many Democrats support the credit union bill, they oppose the reform package, whose drafting they claim was dominated by Republicans.