WASHINGTON — As bankers continue to oppose a bill to create a consumer financial protection agency, lawmakers are turning up the pressure by targeting specific reforms in areas like credit cards, interchange fees and overdraft programs.

The House Financial Services Committee plans to hold a hearing Thursday on two such bills: one to speed up by two months implementation of recent credit card reform and another to regulate interchange fees. Senate Banking Committee Chairman Chris Dodd, meanwhile, is expected to introduce a bill soon to restrict overdraft fees.

Policy analysts said the message from Capitol Hill to the financial services industry is pretty clear: get behind the consumer agency or get run over by individual reforms.

"This is an effort to pressure the industry to negotiate on the consumer financial protection agency," said Jaret Seiberg, a policy analyst with Washington Research Group, a division of Concept Capital. "This raises the stakes for the industry. … The danger is always that what could start as a tactical decision could lead to a bill that gains momentum and gets enacted."

House Financial Services Committee Chairman Barney Frank hinted at the strategy during a press conference last month, when he said bankers were going to have to pick their battles. Frank said he would rather empower a new consumer protection agency to address overdraft fees, but would keep pushing individual reforms until one is created.

"There is a choice to be made," the Massachusetts Democrat said on Sept. 24. "Overdrafts are very much the kind of thing that would go into the consumer protection agency, but I have to say, look, to some extent the banks need to make up their minds. I would prefer to do that through an agency and I believe we would be able to do that. They certainly should understand that if they succeed in delaying that agency — I don't think they will — there will be a series of very specific proposals."

Some analysts said Frank's strategy could backfire.

A Financial Services Committee vote on the consumer agency slated for July was pushed back to allow consumer advocates more time to counter industry opposition and build support. A vote is expected this month, but it's unclear how strong the bill will be.

"The implicit message to the banking industry is to start to play ball on the CFPA. It's probably tougher to get all the moderates on board than people thought," said Brian Gardner, an analyst with KBW Inc. "It could help them further their cause. It is actually a fairly high-stakes gamble I think, because if it's not successful in getting the banks to change their position and if CFPA continues to be slowed down if not blocked, then it's a victory for the industry, and that could have the effect of negatively impacting the chairman's standing."

Ed Yingling, the president and chief executive of the American Bankers Association, said that Congress is just beginning to flex its muscle and that the situation will inevitably get tougher for the industry as regulatory reform heats up. "You can't just look at the consumer agency in isolation; this is going to be part of a much, much bigger bill that is basically going to rewrite all the rules for bank regulation," he said. "Politically, everything is connected to everything else, so it's going to be a very, very difficult and changing process as we go forward."

Yingling said lawmakers are "quite capable of sending messages" but said this was "just at the beginning of what is going to be the most complex and important legislative process that any of us have ever faced."

Yingling said Frank's tactics do "not necessarily" indicate he is having problems mustering the votes for the consumer agency. "The chairman's a very good legislative player and one would expect him to maximize his resources, so that's what he's doing," he said.

But it remains unclear how far Frank can push forward on the credit card and interchange bills. Dodd is not expected to push to move up card reform implementation, and Frank has not planned a vote on the interchange bill. Frank's interest in interchange is unknown. Until last week it was not considered among his priority issues. But observers said he could be holding a hearing on it to drive home the point to banks.

"Moving up the date is a very important issue, but we don't see it moving on the Senate side," Yingling said. "Interchange is more complicated, and obviously we would have to be concerned if the chairman decided he wanted to see an interchange bill move … but he has not said that."

Other industry lobbyists said that they are treating each issue in isolation and that the multipronged approach in Congress does not change their positions or alter their lobbying.

"We are in an era of consumer protectionism and they see an opportunity to advance that agenda," said Richard Hunt, president of the Consumer Bankers Association. "We think that creating a new consumer agency adds to the problem, not subtracts from it."

But consumer advocates said it was a valuable tactic to keep pressuring the banks and said Frank should pass the bills if he can.

"The credit card industry deserves a kick in the head for what they are doing," said Ed Mierzwinski, the consumer program director for the U.S. Public Interest Research Group. "I totally support what the chairman is doing, and if he wants to go a la carte for a while, we'll be with him. I think it's important to let the banks know that the Congress is tired of business-as-usual. … I think it's a smart move by the chairman."

Mierzwinski said even if banks succeed in defeating the consumer protection agency, they will end up paying. "Sooner or later the banks are going to upset more people than Chairman Frank," he said. "They have lived in a dream world for too many years where Congress didn't do anything, and now Congress is making up for all the years that the banks were able to act recklessly and unfairly. … I think the banks would be smarter to be good corporate citizens and not be against everything. But if they are going to be against everything, Chairman Frank says this is the way it's going to be."

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