CRA Reversal Triggers Bitter Trade-Group Fight

WASHINGTON -- Rival banking lobbyists were pointing accusing fingers at each other last week after the House Banking Committee reversed a subcommittee decision to relax the Community Reinvestment Act.

The American Bankers Association charged that the Independent Bankers Association of America unwittingly gave committee liberals ammunition to shoot down the CRA amendments.

Reacting, the Independent Bankers, whose small-bank constituents may have lost the most in the latest vote on CRA, said the ABA is backing a bill that is not in the best interests of community banks.

|Outrageous Scapegoating'

Kenneth Guenther, IBAA executive vice president, accused the ABA of "outrageous scapegoating" and "trade group politics at its worst."

Going into the vote last Thursday, it appeared banks had sufficient votes to retain a modified version of two amendments sponsored by Rep. Paul Kanjorski, D-Pa. One would have exempted small banks from the Community Reinvestment Act; the other shielded banks with high CRA ratings from community protests.

With Friends Like These...

In the end, the industry was done in by its friends.

Rep. Chalmers Wylie of Ohio, the committee's senior Republican, agreed to a compromise that struck both Kanjorski amendments from the bill. In return, a measure sponsored by Rep. Joseph P. Kennedy 2d, D-Mass., that would have applied CRA standards to interstate branching, also was eliminated.

Bankers had expected Rep. Wylie, a CRA opponent, to help them hold the line for the Kanjorski measures. Earlier, Mr. Wylie had worked out a separate compromise with Rep. Kanjorski that would have preserved much of the substance of his amendments.

Democrats assumed that the committee's Republican leader acted at the request of the Bush administration. Some liberal Democrats, whose support the administration needs, threatened to oppose the package if the Kanjorski amendments were not dropped.

Wooing Liberal Democrats

"We knew we would have lost to Kanjorski," exulted one of those liberals, Rep. Barney Frank, D-Mass. "But the administration encouraged Chalmers. They knew there were 60 to 70 liberals they would have lost on the floor."

A spokesman for Rep. Wylie denied that the administration asked for the compromise. Instead, the spokesman said, Rep. Wylie felt that the only way to remove the Kennedy amendment was to give up the Kanjorski exemptions.

Among those dismayed by the deal was Joseph Belew, president of the Consumer Bankers Association.

"It's too early in the process to be giving anything away," said Mr. Belew. The panel has approved a measure requiring disclosure of small-business lending patterns, and other consumer-oriented amendments -- including a government-check-cashing requirement -- are pending.

The IBAA supported the Kennedy measure in part to gut the bill's interstate banking provisions. Sources said the IBAA, which opposes interstate branching, cut a deal to win Rep. Kennedy's vote on an amendment maintaining insurance coverage on multiple accounts.

The multiple-account amendment passed by a one-vote margin when it was considered by the banking panel's financial institutions subcommittee last month.

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