The country's two largest banking companies are trying to stop financial reform legislation from passing the House this year.
Officials at Chase Manhattan Corp. and Citicorp have told lawmakers in recent weeks that last-ditch efforts by House Republican leaders to pass the legislation can only hurt banks.
The industry is once again sending mixed signals to Congress as the American Bankers Association and most other big banks are trying to help lawmakers rewrite the bill.
"We are not going to argue with lawmakers to slow down," said Edward L. Yingling, ABA's lead lobbyist. "Congressional leaders must keep the pressure up, or every issue they deal with will slide away. We must maintain a good-faith effort to get a bill the industry can accept."
Chase lobbyist L. Thomas Block predicted the industry would regret the good will effort. "We would rather have a good bill than a quick bill," he said in an interview.
But a quick bill is what GOP leaders want.
Last week House Republican Conference Chairman John Boehner said he will meet with the chairmen of the House Banking and Commerce committees Oct. 9 to work out a deal. They hope to bring legislation to the floor before Congress adjourns Nov. 7.
Joining Chase and Citicorp in the opposition are KeyCorp, and Barnett Banks Inc., a longtime foe of reform efforts.
Specifically, Chase and Citicorp argue that both versions of the legislation would allow insurance regulators to restrict banks' ability to offer future evolutions of derivatives and other existing products.
Chase's Mr. Block, in an internal memo to his company's executives, argued that most lawmakers do not recognize that new bank products increasingly resemble the offerings of insurance and securities firms. "Congress continues to look at banking matters with a 1933 viewpoint," he wrote.
Mr. Block also complained that the Commerce Committee's plan forbids banks to acquire nonfinancial businesses but allows other financial firms to keep their existing commercial subsidiaries when they buy a bank.
Also, securities and insurance companies would be permitted to launch uninsured wholesale financial institutions without being regulated by the Federal Reserve Board, he said. Wholesale institutions owned by banks, however, would be regulated by the Fed.
"The provisions put existing bank holding companies at a significant competitive disadvantage," he wrote.
Citicorp lobbyist Stephen A. Hopkins added to those complaints in a Sept. 23 letter to House Commerce Committee Chairman Thomas Bliley.
For starters, Citicorp is dead-set against plans to eliminate the thrift charter as envisioned by both committee proposals. Citicorp has used its thrift charter to establish a nationwide consumer banking operation with $14 billion of assets.
The thrift charter, Mr. Hopkins said, is the best vehicle for providing "inexpensive and accessible multistate consumer lending."
Mr. Hopkins also criticized the Commerce Committee proposal because it would limit the operations of bank subsidiaries to the activities a bank is already permitted to conduct. That would roll back the Comptroller of the Currency's decision to expand bank operating subsidiary activities. Banks, he said, would be robbed of their "most important franchise improvement."