The Republican sweep in Tuesday's off-year election met with an oddly muted reaction among bank-stock investors.
While the Republicans are generally viewed as pro-business and friends of the banking industry, investors apparenfiy are not convinced that their gaining control of both houses of Congress will be of much benefit to the industry.
Bank stocks which had tagged the broader stock indexes on Tuesday, were mixed Wednesday, despite a rally in the bond market.
Bank analysts questioned whether Sen. Alfonse M. D'Amato, who is expected to take over me cnaffmansmp or the Senate Banking Committee, can be considered a friend to banks.
"He proposed in .the fall of 1991 a law to put an interest rate cap on credit cards," said Elizabeth Summers of Ryan Beck & Co.. "Credit card [issuing bank] stocks tanked the next day. That s not free market. That scares me."
Mr. D'Amanato also is seen as an ally to New York's investment banking community who cannot be expected to push hard for broader bank securities powers.
Nancy Bush, an analyst with Brown Brothers, Hamman & Co. worded that Mr. D'Amato and Rep. James Leach, R-Iowa, who will bead of the House Banking Committee, may be too preoccupied with the high-profile Whitewater hearings next session to spend much time on other important banking issues.
Ms. Bush noted that under the Democratic Clinton Administration. banks have fared beller than they did under the Republican Administration of George Bush. For one thing, president Clinton was able to pass an interstate banking bill.
Although rates have risen lately, they generally have come down under the Clinton Administration, which passed a budget that temporarily, at least, reduced the Federal deficit.
To the extent that the Democratic administration's liberal leanings do tend to cut against banks, the makeup of Congress may have little effect.
Ms. Summers noted that the Administration seems to be moving toward credit allocation under the Community Reinvestment Act. 2