Rep. Joseph P. Kennedy, an unrepentant liberal in a newly conservative Congress, is ready to cut a deal.

As he sees it, the insurance agents want banks out of their business and banks want Glass-Steagall repeal and regulatory relief - with no restrictions on insurance powers.

His fellow liberals for the most part don't care who wins that debate. But they do care about fair-lending, and Rep. Kennedy thinks the two issues can be linked.

He said he hopes to bargain for new legislation that would add small- business loans to the credits covered by the Community Reinvestment Act.

If bankers are willing to go along, he said, his group might support them in their fight with the insurance industry. If not, the liberals would be just as happy to throw in with the insurance agents against the banks - particularly if the insurance industry was willing to accept some CRA-like standards.

"You could probably get a pretty good consensus of the black caucus, the Hispanic caucus, and a lot of liberal Democrats that would say, 'What interest do we have in terms of all this?'" he said.

"What do their constituents care whether they vote for the banks or the insurance companies?" he added. "So if that gives us an opportunity to stand up and get something done for the consumers, that's a pretty terrific opportunity."

In fact, it's a pretty slim reed Rep. Kennedy has chosen to lean on, and he knows it. With the conservative tide running against him, Rep. Kennedy acknowledged that he will be lucky just to hold the line this year, to keep Republicans from scaling back the Community Reinvestment Act and other consumer-oriented laws.

"There's no question that there are issues related to civil rights, economic growth, and fair-lending that are taking a real beating," he said during an interview last week that began in his Rayburn Building office and continued - after an interruption for a vote - in the "speaker's lobby," just off the House floor.

"If by any chance Bill Clinton is not reelected, this would be a pretty grim place to work," he added. "It would be enormously difficult to get the kinds of legislation passed that I believe in."

That doesn't mean the banking industry can afford to become complacent. If the liberal dream Rep. Kennedy cherishes is on the verge of collapse, the opportunity he sees in the battle between industries could still be enough to give bankers heartburn.

It's true, of course, that the Republican majority that runs the House is clearly pro-business and clearly predisposed to help bankers with their complaints about burdensome regulation. But party affiliation doesn't matter on issues that require lawmakers to choose between industries.

In addition, the GOP holds only a slim majority in the House. On issues where even a few Republicans dissent, the Democrats - dominated by Rep. Kennedy's band of liberals - could prove decisive.

But the key is whether Republicans stand together, Rep. Kennedy said.

"There's an opportunity to put together a coalition of Democratic votes with the banking or insurance folks," he said. "But the Republicans have the capability of eliminating that as an opportunity if they compromise among themselves."

Slender though that reed is, it's enough to give hope to an otherwise glum Rep. Kennedy, who fears the laws and values he has spent a lifetime nurturing could be washed away in the Republican tide.

Still, Rep. Kennedy suggested that bankers should keep some perspective about where their issues rank in the priorities of legislators.

"There are a large number of Democrats who have never been asked at a town meeting how they feel about the Glass-Steagall Act," he said.

That goes for Republicans too.

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