The scrimmage over Connie Lee's proposed entry into the A-rated bond insurance market will break for this week with congressional staffers' extended Memorial Day vacation, but when play resumes the game is expected to heat up quickly.

Connie Lee, officially known as College Construction Loan Insurance Association, has enlisted its lobbyists at Williams & Jensen PC to urge a loosening of the federally empowered bond insurer's mandate.

Williams & Jensen, which is also the lobbying arm for the Student Loan Marketing Association, is trying to persuade lawmakers that Connie Lee would better support the country's educational financing needs if it were allowed to insure high-quality bonds.

At the other end of the field, Financial Guaranty Insurance Co. is carrying the ball for the "private" bond insurance industry. The firm, 100% owned by General Electric Capital Corp., is tapping the full-time talent of GE's corporate government relations office to argue that Connie Lee, by seeking the A-rated or better territory, has lost sight of its very reason for being -- the social good of insuring weaker educational institutions.

The congressional staffers, aides to the bicameral conference committee working on reauthorizing the Higher Education Act, are expected to have an acceptable bill ready for signing by June 19 or so, according to Capitol Hill observers.

There are many issues being tossed about, such as the funding of a guaranteed student loan program for historically black colleges and universities, so the GE and Sallie Mae interests will be only two of many voices in congressional staffers' ears.

Two of the most influential congressmen on the committee are Rep. Ronald Coleman, D-Tex., who sponsored the Connie Lee amendment, and Sen. Christopher J. Dodd, D-Conn. The contestants will be chatting up lawmakers' aides, in particular.

One of the biggest fears registered by the private bond insurers is the well-muscled trading value Connie Lee brings to the municipal market. Traders and analysts, eyeing the Department of Education's 15% stake in the firm, conclude that Uncle Sam will never let it go belly up -- despite less-than-vigorous claims from Connie Lee's management to the contrary.

As a result, Connie Lee brings the perceived backing of the federal government to the contest. Sources in the Department of Education maintain that the $19 million it put up for Connie Lee's seed money is strictly an investment, and that once it cashes out, whatever capital appreciation is realized will go right back into the Treasury.

GE and FGIC, at this point unassisted by the rest of the financial guaranty industry, hold that "any amendment, because of vague language regarding rating agency criteria and insurance company specifications, will take Connie Lee beyond its charter," a FGIC spokesman said last week.

And GE will stress this point to the staffers. Anne Canfield and Robert W. Barrie of GE's Washington office are charged with the task.

At Williams & Jensen, Winfield Krieger is representing the Connie Lee perspective. Ms. Kriegler on Friday declined to discuss the amendment or Connie Lee's rationale for it, saying the company's policy is to refer inquiries to clients.

Oliver Sockwell, president and chief executive officer of Connie Lee, said the proposal stemmed from universities with higher credit quality whose previous attempts to obtain bond insurance were unsuccessful.

"They don't want their names to be published," he said when asked for examples of such institutions.

"We do not have any evidence whatsoever that [the A-rated] sector of the market is not being served by private industry," Ann C. Stern, president and chief executive officer of FGIC, said last week.

Mr. Sockwell said, "The reason we're doing this is to support our mission, which is to help schools who haven't been able to get bond insurance. We don't have any desire to take business from the other insurance participants.

"It's a tempest in a teapot," he added. "I expect that we will find language that's acceptable."

Changes to Connie Lee's chapter, on the other hand, were not deemed necessary a year ago. On the morning of July 25, 1991, the House subcommittee on post-secondary education heard testimony from Mr. Sockwell. Rep. William D. Ford, D-Mich., asked Mr. Sockwell whether there was anything the subcommittee could do to make life easier for Connie Lee. One observer attending those hearings said it was "an invitation" to the new bond insurer.

"We currently believe that we can go very far in achieving the mission under the legislative mandate that was created in 1986," Mr. Sockwell said.

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