Hours after Fleet Financial Group and Shawmut National Corp. said they would create the nation's ninth-largest banking company by merging, Connecticut bankers found themselves scrambling to keep key pieces of their legislative program moving toward passage.

Angry lawmakers had threatened to derail about a dozen banking bills because the merger between the two giants would result in the loss of more than 1,200 jobs in the state and the closure of scores of branches.

"Everybody got angry at banks," said Gerald Noonan, president and chief executive of the Connecticut Bankers Association, which spent weeks calming lawmakers instead of lobbying them. "They (legislators) just didn't want to discuss anything."

The virtual shutdown of the legislative agenda bottled up key banking bills, including a bill to "opt in" early to interstate branching and another to allow state-chartered institutions to sell annuities with state licenses. The bills were supported by the state's community banks and the state banking department.

"The reaction of the legislature was improper," said J. Gilbert Soucie, president and chief executive of $220 million-asset Glastonbury Bank and Trust Co. "That was a knee-jerk reaction. There are some good bills, and it was a bit like throwing the baby out with the bathwater."

The mood, however, has calmed in recent weeks since Fleet said it would restore the 1,200 jobs by moving certain operations back to the state. Now, most of the pending banking bills that were frozen in the state's joint Banks Committee have begun to advance.

"Cooler heads have prevailed and we're back to a more normal situation," Mr. Noonan said. "I hope it stays that way."

The legislators were following the lead of Republican Gov. John Rowland, who was demanding that the two regional banks respond to concerns about the effects of the merger on the state's economy, particularly employment.

Lawmakers held the bills hostage to use them as vehicles for possible action against the two merging giants. In particular, lawmakers were prepared to authorize the state banking commissioner to regulate branch consolidation, preventing Fleet from closing branches at will, said Banks Committee chairman Sen. Kevin F. Rennie.

Other proposals included allowing the commissioner to review deposit concentration by Fleet and lowering the 30% deposit cap in the interstate branching legislation just to spite the merger partners, Mr. Rennie said.

"We really were a united front in our willingness to consider legislative action," Mr. Rennie said. "We knew we couldn't force them to keep particular branches in the state (but) we also were aware that they needed the interstate branching act" to trim operations and save money.

Lawmakers were so determined to force action that the bills might have remained stalled despite their importance to Fleet's competitors, the state's community banks, Mr. Rennie speculated.

"The journey for those bills would have been an unending debate about the consequences of a historically large bank in Connecticut," he said. "The debate would have had very little to do with the more complex issues of interstate banking and branching. There would have been a common refrain: 'What about Fleet?'"

Even with the frustration of having legislation delayed, however, some bankers didn't blame the legislators for their strident measures.

"The interests of the state and the people in the state must be considered or the combiners risk at least significant delay in the processing of the transaction, if not derailment," said James C. Smith, president and chief executive of Webster Financial Corp. in Waterbury.

"To observe this experience is valuable to anybody who might be considering doing the same thing, whether in Connecticut or in another state. It's all part of the learning process as we enter the age of interstate branching."

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