No group has been more loyal to Republicans through the years than bankers. It didn't matter that Democrats controlled Congress for half a century; Republicans espoused free-market principles in which bankers believed.
Bankers were almost giddy when the Republicans captured control of Congress in 1994. The industry would finally get the yoke of 60 years of excessive government regulation off its back.
Now, after four years of disappointments from congressional Republicans, the giddiness is gone. Dissatisfaction among bankers is strong and widespread.
The trail of broken promises and unprincipled actions is disheartening.
One of the first actions of the Republican Congress was imposition of a $12 billion tax on banks to recapitalize the savings and loan deposit insurance fund. That the banks had nothing to do with the creation of the S&L problem was of no concern. That Congress had previously enacted legislation requiring the Treasury (that is, all taxpayers) to make up any deficiency in the S&L fund didn't matter.
In imposing that enormous tax on banks, the Republicans agreed to later merge the bank and S&L insurance funds and to unify the bank and S&L charters and regulatory systems. That agreement was jettisoned in order to get S&L support for HR 10.
HR 10-the so-called "financial modernization" legislation-was opposed by all but a handful of banks. It squeaked through the House only after the leadership used highly irregular and inappropriate tactics to nullify a clear defeat on the floor.
Two months before the vote on HR 10, I attended a meeting where bankers were encouraged by a senior member of the House leadership not to abandon the legislative negotiations. The Republican leader assured the bankers that no bill would be brought to a vote unless and until all major financial-industry groups were satisfied with it.
HR 10 was nonetheless pushed to a vote over strenuous opposition from the American Bankers Association, the Independent Bankers Association, and the Bankers Roundtable. Another promise broken.
Instead of satisfying the reform-minded members of its own party on HR 10, the Republican leadership brokered a deal with Rep. John Dingell, D- Mich.-for years the staunchest opponent of reform. So much for principles.
Then there's the credit union matter. The National Credit Union Administration adopted a regulation that nullified the legislative requirement that credit union members have a "common bond." It allowed the development of enormous, tax-exempt credit unions operating across the land in direct competition with tax-paying community banks.
The banks litigated, and the Supreme Court ruled that the NCUA had violated the law. The Republicans stampeded to adopt legislation blessing the NCUA's illegal action. They even struck language from the bill applying the Community Reinvestment Act to these self-described benefactors of America's communities.
Taxpayers will now subsidize the operations of giant credit unions, which service a clientele that has more education, income, and homeownership than the general population. So much for limited government involvement in the economy.
Senate Banking Committee Chairman Alfonse D'Amato has announced that his committee will mark up "financial modernization" legislation on Sept. 3. After listening to the senator rail about the need for government-imposed price controls on ATM fees, bankers contemplate the markup with trepidation.
The New York Republican proposes to attach his price control legislation to the bankruptcy reform bill pending in the Senate. This would jeopardize the delicate political balance on the one bill bankers have been counting on.
The chief executive of a large bank said recently during a meeting of bankers that it would be a long time before he or his bank again supported Republican candidates. No one took issue with him.
My guess is that bankers will at the very least become very selective. They will support candidates of either party who prove by their actions that they believe in free markets and limited government. Party labels seem to have lost their meaning.