WASHINGTON - Sen. Alfonse M. D'Amato, a longtime nemesis of bankers, is beginning to sound like one of their best friends.

"I think you will find that it is this senator who spoke first about the onerous burden of placing taxes on state-chartered institutions," he said during a recent interview, deflecting a question about his once-strained relations with the banking industry.

Warming to his subject, the New York Republican ticked off a. long list of legislative initiatives he has undertaken on behalf of the banking industry: to cut burdensome regulation, to permit banks to sell small-business loans into the secondary market, and to limit lender liability. And someday, he promises interstate branching.

Rapid-Fire Delivery

Words tumbled out and his voice rose as he raced from one subject to another, sometimes not bothering to finish one sentence before starting the next.

"That's where I'm coming from. That's what I believe," he said emphatically. "And you should not draw the conclusion that I am in opposition to the banking industry simply because I may not support all the powers they might want.

"Eight out of 10 ain't bad," he added.

That sentiment could serve as the motto for Sen. D'Amato in his evolving relationship with the banking industry.

Taking Banks' Side

The three-term Senator, who became the banking committee's ranking Republican this year, won't support the industry every step of the way. But he made it clear during a recent interview that in the years to come he will be on the industry's side more often than not.

His Capitol Hill career is epitomized by the pictures on the walls of his Hart Building offices - Sen. D'Amato with Pope John Paul II, Sen. D'Amato with President Bush, Sen. D'Amato winning reelection.

But most bankers remember the onetime Long Island town supervisor as a staunch ally of the securities industry, who in years past helped block efforts to repeat the Glass -steagall Act.

Sponsor of Card Rate Cap

Or as the lawmaker who in one lightning-quick strike, singlehandedly pushed through a Senate amendment in November 1991 capping credit card rates.

Sen. D'Amato has no apologies for the credit card amendment, which died when the House refused to go along, but he said he is unlikely to resurrect it.

"If you take a look, you see a heck of a lot more competition these days," he said. "I think our pressure had something to do with it."

"Can you imagine?" he went on, his tone rising in indignation and anger. "Seven out of the 10 largest banks having exactly the same interest rate, down to the decimal - nineteen-point-eight-zero? And seven of 10 banks controlling 50% of the credit cards?

"I think the Justice Department should have acted, but that Justice Department had its head up some other place," he said with a characteristic flourish.

Sen. D'Amato has no trouble defending his past support for the securities industry.

"I have been mindful of the needs of an industry as important to this country and to my state, and that has helped provide needed capital," he said. "It is one of the engines of economic growth."

But in a bow to another key constituency - the big New York banks - he deflects questions about repeal of the Glass-Steagall Act, noting that "it isn't even on the radar right now."

Other issues, he added, are of more pressing concern. And on many of those issues, Sen. D'Amato - with his in-your-face, New York style - thinks he can be a better friend than the banking industry might imagine.

Lender Liability

He has reintroduced a lender liability bill that his predecessor as ranking banking committee Republican, Sen. Jake Garn of Utah, struggled mightily with in the past, only to see it die at the hands of hostile House committees.

Sen. D'Amato all but promises that he will see it passed.

"If the House wants certain legislation, they're going to have to take it, because I'm going to hook it on," he said. "I know how to do that."

No one doubts that Sen. D'Amato - who has been described in the New York press as "Senator Pothole" - will go to the mat to help a constituent group.

Last year, when a new New York-based typewriter company needed legislative help, he launched a 15-hour, 15-minute filibuster - the sixth longest in Senate history - that brought Congress to a halt in the final days of the session.

"He's effective because he's willing to fight if he's on your side," said Edward L. Yingling, executive director of government relations for the American Bankers Association. "He likes being in the middle of the fray."

Sometimes that puts Sen. D'Amato at odds with his own party, as he was in the latter years of the Bush administration when he argued long and loud for the dismissal of Treasury Secretary Nicholas Brady.

"He didn't know when it was raining," said Sen. D'Amato of the former Treasury chief, who was a close friend of Mr. Bush.

"He thought we were in this huge recovery" during 1992, the senator added. Instead of attacking the recession, "he let it languish."

Pat on the Back

The Republican senator appears much happier with President Clinton's Treasury Department, notwithstanding its Democratic cast.

"At least I see their efforts at Treasury in recognizing problems that exist in the real world where small businessmen can't get loans," Sen. D'Amato said. "And they are attempting to do something about it, and make it possible for banks to do something."

For his part, Sen. D'Amato is sponsoring a broad array of proposals that he thinks will make life easier for banks and, as a result, businesses and consumers.

Chief among them is a regulatory relief initiative he sponsored with Sen. Richard Shelby, D-Ala., and Sen. Robert Dole, R-Kan. Among other provisions, it would permit the President to suspend many laws or regulations that hurt credit availability or that cannot be justified on a cost-benefit basis.

The New Yorker also introduced legislation that would provide an alternative to President Clinton's community development bank plan. Rather than fund new institutions with government money, the D'Amato bill would permit commercial banks to meet their Community Reinvestment Act responsibilities by investing in community development banks.

Sen. D'Amato said his bill has little chance of enactment because" in the real world, people will say it's an attempt to avoid CRA. But do we really want to take a pot of money that comes from taxpayers and set up a whole new system, if we have the money available" in existing banks?

In small-business loan securitization, rather than creating a new government agency as others have proposed, Sen. D'Amato would modify existing laws and regulations that he believes stand in the way of a private-sector market.

|Reverse Redlining'

Along with Senate Banking Committee Chairman Donald W. Riegle, Sen. D'Amato is sponsoring a bill aimed at curbing "reverse redlining," a practice of making expensive second-mortgage loans to low-income people who often lose their homes as a result.

Interstate branching will have to wait for another year, though Sen. D'Amato regards it as eminently sensible.

"Everything is in timing, and we have a rather full plate," he said. "Reverse redlining, we'll be moving on that. Securitization [of small-business loans], we'll be moving on that. Lender liability, we'll be moving on that and a few other issues."

But interstate "is a pretty controversial issue."

Still, when Sen. D'Amato decides the time is right for interstate banking or anything else, nobody doubts he will throw everything he has into the battle.

"The truth is," said the ABA'S Mr. Yingling, "he just likes a good fight."

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