Guinier fallout could doom bank legislation.

Will Lani Guinier end up taking down a banking bill?

President Clinton's decision last week to withdraw Ms. Guinier's nomination for a top civil rights post provoked an outcry among women and minority groups on Capitol Hill, as well as among the liberal advocacy groups whose views influence legislation.

The fallout, some observers said, could affect legislation ranging from community development banks to funding for the thrift bailout.

Some of Ms. Guinier's supporters "are saying they want to take the President out on something," said Deepak Bhargava, the banking lobbyist for the Association of Community Organizations for Reform Now, or Acorn. "Their thinking is that if liberals don't show some backbone now, they'll be ignored."

While their numbers are not overwhelming, Ms. Guinier's supporters could be decisive in some legislative battles. For example, the Congressional Black Caucus, which has 40 members, will reevaluate its relationship with the President in wake of the episode, said Rep. Kweisi Mfume, D-Md., the chairman of the caucus and a senior member of the House Banking Committee.

Bank Network a Target

One likely target of angered constituents, Mr. Bhargava noted, is President Clinton's proposed network of community development banks, a cornerstone of the administration's banking policy.

While the issue is important to the President, "there isn't a significant amount of money involved and it wouldn't hurt to lose it," said Mr. Bhargava.

If President Clinton is unable to repair his damaged relationship with congressional minorities, some observers believe a funding measure for the Resolution Trust Corp. could be doomed.

Critical 40 Votes

"The RTC bill is already in so much trouble that 40 votes walking out could just do it," said Karen Shaw, president of the Institute for Strategy Development, referring to the 40-members black caucus.

Ms. Shaw said the RTC funding bill could be the perfect measure for congressional minorities to demonstrate their displeasure.

The bill is difficult and unpopular already, and its huge funding component stands in marked contrast to the spending cuts urban lawmakers have suffered in other areas.

Last month, she said, "liberals and members of the black caucus held their noses and voted for the President's budget package, which included cuts that hurt their constituencies."

An aide to Mr. Mfume said the Maryland Democrat would likely still support the RTC package, in no small part because of the minority contracting provisions hammered out with the help of the panel's chairman, Rep. Henry B. Gonzalez, D-Tex.

But Republicans have already labeled those requirements as "quotas," and a debate on that issue could further antagonize minority lawmakers already angry over the charge that Ms. Guinier was a "quota queen."

"If we see a quota argument develop, then you can expect a backlash over Lani Guinier," said one congressional aide with ties to the black caucus.

Impact on Regulatory Relief

Other observers believe the fallout from the Guinier nomination could dampen the enthusiasm among banking committee members for any proposals President Clinton might make for regulatory relief.

"African Americans and other minorities have a very strong representation on the House Banking Committee," noted Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America. "This will make them less inclined" to work with Mr. Clinton.

The same rationale might well apply to interstate branching, which the administration is expected to back.

But there are clear signs that the incident will not be soon forgotten.

Acorn's Mr. Bhargava, for example, counts himself a committed Democrat who would rather stick with his party. But he took out nearly a week from his usual work on banking issues to work full time on the Guinier nomination and he is angry.

"We're extremely ticked off," he said. "There needs to be a show of force, but I'm not sure where yet."

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