Could 1993 be the year the banking industry turns its legislative fortunes around?

Before the American Bankers Association and other industry trade groups even begin to plan strategy for next year, they need to know who will be in the White House.

But there is good reason to believe that on the key issue of regulatory burden - the No. 1 issue in the eyes of the American Bankers Association - the banking industry will find a receptive ear no matter who wins in November.

President Bush got religion long ago. His Credit Availability and Regulatory Reform Act contemplates a massive assault on virtually all the regulations bankers find burdensome.

Earlier this month, Gov. Clinton began promising a "serious review of the regulatory practices" of federal banking agencies to make sure they don't inhibit loans to small businesses.

And two close Clinton associates are bankers: William Bowen, the retired chairman of First Commercial bank, Little Rock, is the governor's chief of staff; and William H. Brandon, the new president of the American Bankers Association.

Clinton aides believe with nearly religious fervor that they can win the election if they focus squarely on the economy. In fact, a sign that hangs in the Clinton campaign headquarters in Little Rock, reads, simply, "The economy, stupid."

Bank lobbyists are borrowing the same logic to advance their aims.

And if the industry can link its agenda to economic growth, the odds on favorable banking legislation will go up dramatically.

"Last year, we had to fight the hysteria of the savings and loan disaster and the horror stories circulating that the same thing could happen to the Bank Insurance Fund," said Edward L. Yingling, the ABA's executive director for government relations.

Continued improvements in bank profitability could calm the remaining jittery nerves on Capitol Hill, said Mr. Yingling.

The industry's long campaign against regulatory burden also appears to be having an effect. After years of steady increase in regulation, Congress suddenly reversed course last month and trimmed back the compliance burden.

The relief package "was more a symbolic matter rather than a real regulatory relief package," said Peter Blocklin, the ABA Senate lobbyist who pieced the package together behind the scenes.

"But it shows that members [of Congress] are finally starting to listen to what their bankers have been telling them," he added.

In the ABA's Corner

The ABA is on the verge of cutting a deal with consumer lobbies to gain support for legislation that would expand bank insurance powers.

On issues important to larger banks, such as Glass-Steagall repeal and interstate branching, a consensus of sorts appears to have developed in both the House and Senate in favor of the industry's position.

However, Glass-Steagall and interstate are in a separate category, owing to the complex political calculus that surrounds each.

The chairman of the House Banking Committee, Henry B. Gonzalez, D-Tex., and his Senate counterpart, Donald W. Riegle Jr., D-Mich., are counted as opponents on both issues. And House Energy and Commerce Committee Chairman John D. Dingell, D-Mich., has long blocked efforts to expand bank securities powers.

Bank lobbyists in Washington see little reason to believe next year will be any different. So it is likely that much of the industry will focus on a more limited agenda, with regulatory relief at the center.

For all the hopeful signs that many bank lobbyists perceive on the regulatory burden issue, the industry faces some formidable obstacles in 1993.

Marching-Zombies Theory

The first is the so-called "December surprise," the theory that a number of brain-dead institutions are being kept alive until after the election.

In fact, the prompt corrective-action provisions in last year's banking bill - which take effect Dec. 19 - would require regulators to begin closing banks whose capital dips below 2%.

Moreover, the Resolution Trust, Corp., is almost certain to ask Congress to consider new funding, early next year. In 1991, a series of tough and bitter votes on RTC funding left a bad taste in nearly everybody's mouth, particularly the freshman members of the House Banking Committee.

Next year could be even worse because Congress will also have to consider startup funding for the Savings Association Insurance Fund.

Mr. Yingling expects the number of institutions closed due to prompt corrective action will be little more than "a blip," in part because bank profits are improving.

"It's impossible to play strategy without knowing who the leadership will be," said Robert Rusbuldt, a lobbyist for the Independent Insurance Agents of America.

It appears all but certain that Democrats will gain seats in the Senate and lose some in the House, where legislative redistricting will alter the balance of power.

The major committee chairmen for banking issues - Rep. Gonzalez and Rep. Dingell in the House, and Sen. Riegle in the Senate - are all expected to be back.

But Sen. Alan Dixon of Illinois, a moderate Democrat who often takes a pro-industry position on the Senate Banking Committee, was defeated in his state's primary.

Some of the industry's most important allies on the House Banking Committee - Doug Barnard, D-Ga.; Carroll Hubbard, D-Ky.; and Thomas R. Carper, D-Del.; among them - have either retired or suffered primary election defeats.

In addition, the ranking Republican members of each committee will be different. Sen. Alfonse M. D'Amato of New York, a traditional Wall Street ally on issues involving bank securities powers, is in line for ranking position on the Senate Banking Committee, though he faces a tough reelection battle.

Republican Rep. Jim Leach of Iowa, perhaps Capitol Hill's leading hawk on bank capital issues, is likely to assume the ranking spot on the House Banking Committee, following the retirement of Rep. Chalmers Wylie, R-Ohio.

Mr. Leach is fiercely independent, and bankers are wondering how effective he will be in advocating a party position when it conflicts with his own.

In general, Republican law-makers have shown themselves more sympathetic to bankers on many issues.

On the other hand, analyst Karen Shaw argues that the coming sea change - many observes believe that 150 or more seats could turn over in the 435-member House - poses trouble for bankers, no matter which party comes out on top.

Many of the newcomers, she said, will have campaigned as outsiders and, as a result, "will owe their victory, at least in part, to their rejection of the system which created the deposit insurance crisis."

Still, it is the race for the White House that lobbyists are focusing on most keenly.

The American Bankers Association has an unusually rich network has an unusually rich network of ties to Gov. Bill Clinton that could become important if he becomes the next occupant of the Oval Office.

Chief among the industry's face cards are Mr. Brandon, who becomes president of the ABA this week, and Mr. Bowen, the governor's chief of staff.

Like Gov. Clinton, Mr. Yingling is from Kansas and has worked for Sen. William Fullbright, an Arkansas Democrat - first as a page during school and then as a legislative assistant after his graduation from law school. Mr. Yingling has kept up his Arkansas connection. Eight years ago, for example, he served as finance chairman for the reelection campaign of Sen. David Pryor, D-Ark., who is likely to be a key Clinton ally on Capitol Hill.

Bankers have ample representation in the Clinton campaign's inner circle in the form of Charles T. Manatt, a onetime banker who has built a sizable bank law practice in Washington. Mr. Manatt is national co-chairman of the Clinton campaign and his law partner, Mickey Kantor, is the governor's campaign manager.

If Mr. Bush is reelected - and particularly if his coattails swell Republican ranks in the House - the banking industry would likely be in even better shape.

But while the ABA is waiting for the election results to finalize its lobbying strategy, there is one exception, said Mr. Yingling.

"We're definitely going after regulatory burden, no matter what," he said.

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