In beating back a plan to bolster the Savings Association Insurance Fund, the banking industry demonstrated last week that it can still muster the political firepower to score big wins on Capitol Hill.

Following disappointments on Glass-Steagall reform and other legislative initiatives, the victory surprised many observers and offered fresh hope for future lobbying efforts.

The key, experts said, was that the often-divided industry managed to pull together and wage a compelling grass-roots fight. That was enough to defeat a heavyweight lineup that included the Clinton administration, House Speaker Newt Gingrich, and banking regulators.

"Anytime you can beat that kind of full court press, it's impressive," said Mark Olson, a partner in the Washington office of Ernst & Young.

Commercial banks have fought the savings fund bailout tooth and nail because it would force them to pick up $600 million in annual interest payments on thrift rescue bonds issued in the late 1980s. Last week's victory kept the plan out of the federal budget agreement, but the administration is sure to keep pushing the measure.

The American Bankers Association has been especially effective on the issue, observers say. Since the beginning of the year, ABA members nationwide have sent thousands of letters to lawmakers, urging them to block the thrift fund fix.

At the same time, 19 state banking trade groups traveled to Washington, bringing 25 or so bankers to complain to their elected officials about the bailout.

"The ABA had all their resources lined up," said former Federal Reserve Governor John LaWare, now a partner with the Secura Group. "They did a high-powered job of lobbying the issues."

Added William Seidman, former chairman of the Federal Deposit Insurance Corp.: "Given the past effectiveness of bank lobbying, it was a little surprising. One lesson is banks have got to have agreement among themselves."

Certainly, the industry overcame remarkable odds last week.

When Rep. Gingrich and House Majority Leader Richard Armey agreed to tack the thrift fund bailout onto a one-day spending bill that had to be passed April 23, thrift lobbyists believed they had a can't-fail lineup pushing the plan.

But fail it did. Just hours before Congress passed the stopgap "continuing resolution," the House Rules Committee stripped the thrift fund fix from the spending bill.

Mr. Olson points out that the victory in the Rules Committee was no accident. Remembering defeats of interstate banking bills in that committee a decade ago, the ABA paid special attention to lobbying members of the panel this time.

"That's what makes it unique," Mr. Olson said. "The Rules Committee is not an area where the industry has had great success before."

The House Rules Committee is a key panel that must approve almost all legislation before it is brought to the floor for a vote.

"Our basic strategy for many months was to make the SAIF plan as controversial as possible," said Edward L. Yingling, chief lobbyist for the American Bankers Association. "That helped get the key players on the Rules Committee sensitized to our concern."

Convincing Rules Committee members to quash the savings association fund rescue was a classic piece of political gamesmanship, Mr. Yingling said. Republicans on the panel, who hold a 9 to 4 majority, are appointed by the Speaker and rarely challenge his pet projects.

Fortunately for banks, two members of Congress supportive of the industry sit on the panel - Rep. Deborah Pryce, R-Ohio, and Rep. Martin Frost, D-Tex. Opposition from Reps. Pryce and Frost swayed other Rules Committee members to block the plan.

The thrift industry, which actively supported the recapitalization plan, grouses that things would be different if Republican leaders and the administration had put more pressure on the Rules panel. Without White House pressure, opponents of plan easily swayed uncommitted committee members.

"The ABA worked the issue hard, but it came down to a rather fortuitous combination of the right people on the Rules Committee," said James Butera, a bank and thrift lobbyist who pushed for the bailout.

Rep. Frost has long enjoyed the industry's goodwill. During 1993 and 1994, Democrats controlled Congress, he received $42,450 in campaign contributions from commercial banks, according to the Center for Responsive Politics. In 1995, he received $20,500.

Rep. Pryce is also a favorite of the banking industry. Last year Rep. Pryce was a leading House recipient of campaign contributions from commercial banks with $23,912.

Rep. Pryce's district is home to one of the most active opponents of the thrift fund plan, Columbus-based Banc One Corp. Banc One, which has the industry's largest political action committee, has been a leading contributor to Rep. Pryce.

Though Rep. Pryce's campaign pulled in another $12,000 at a fund-raiser sponsored by Ohio banks last week, she denied that industry contributions influenced her decision to block the thrift plan.

"Attaching such a controversial piece of legislation on a continuing resolution was something that took us by surprise and something we could not abide," she said.

Rep. Frost, for his part, said the White House did not pressure him or the panel's three other Democrats. "Prior to the committee meeting I hadn't heard anything from the administration and I don't think the other Democrats did either," he said. Rep. Frost wouldn't say, however, whether White House pressure would have convinced him to change his vote.

A letter from President Clinton urging Congress to pass the plan wasn't sent to lawmakers until the following day.

But Treasury Under Secretary John D. Hawke vigorously challenged the idea that the White House position was a mystery.

"To suggest that there would have been a different result if we'd only talked to more people is to ignore the fact that a number of key people were representing the ABA position," Mr. Hawke said.

Executives from state banking associations said many lawmakers opposing the thrift fund fix were motivated by legitimate concern for banks back home, not political contributions.

With the number of Texas thrifts rapidly dwindling, lawmakers from that state are rightly concerned about protecting banks first, said Robert Harris, president of the Texas Bankers Association.

In addition to Frost, Texas Rep. Sam Johnson was instrumental in blocking the thrift fund fix. He penned an April 16 letter signed by 25 other House members to Rep. Gingrich warning they would oppose attempts to tack the savings association fund bailout to a budget bill.

Richard D. Driscoll, president of the Massachusetts Bankers Association, pointed out that his state has only a handful of institutions insured by the Savings Association Insurance Fund. So the bailout disproportionately would benefit thrifts in other states, he said.

"When we met with our congressmen and senators, we said a vote for the SAIF plan was a vote to export $25 million a year from Massachusetts to other states," he said.

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