WASHINGTON -- In the credit card industry, "Remember D'Amato" resonates like "Remember the Alamo."

MasterCard International and Visa U.S.A. have put troops on the ground in Washington to make sure they don't get blind-sided again.

Galvanized by Sen. Alfonse D'Amato's 1991 proposal to cap interest rates, which almost passed into law, MasterCard International and Visa U.S.A.

Joined with the American Bankers Association and other lobbyists to quash the initial threat.

Then MasterCard assigned public affairs expert Charlotte Rush to head a new Washington office. Visa hired veteran congressional staffer Lamar Smith.

Two Operations, One Message

They operate from separate offices less than a mile apart, but they confer frequently and send the same basic message: Don't tread on us.

If these lobbyists have their way, legislators will think twice about regulating surcharges, requiring more consumer disclosures, or anything else seen as hindering the growth and smooth operation of the bank card business.

Government meddling "undermines the efficiency of the economy and has a real cost to the economy," Mr. Smith said in a recent interview. "My role is to explain that to congressional and administrative policymakers."

"We have a very dynamic industry that offers a wide range of products for consumers," Ms. Rush said. "Our role is to help everybody understand the product so that it can be used and regulated wisely."

Washington Experience

Mr. Smith, 50, is well versed in economic and banking theory. He wrote his doctoral thesis on the public policy implications of electronic fund transfers.

For six years before taking charge of Visa's legislative office, Mr. Smith was Republican staff director of the Senate Banking Committee. Prior to that, the Oklahoma native was chief economist for Texas Commerce Bank.

Both Mr. Smith and Ms. Rush have used the eight months since their respective appointments to learn about their organizations and to put their lobbying skills to work.

Before being named vice president of public affairs at MasterCard, Ms. Rush spent five years as group manager of communications at the conservation group Ducks Unlimited in Chicago. The 42-year-old Ohio native was director of Gulf Oil's Washington office prior to that.

To help her on legislative matters, MasterCard hired Washington insider William P. Binzel, the former Republican counsel for the House Banking Committee's subcommittee on consumer credit and insurance.

Eventually, MasterCard might hire another person to head consumer affairs.

Putting Someone on Scene

Before opting for the in-person Washington presence, MasterCard and Visa relied on the Washington office of Morrison & Foerster, the San Francisco law firm, for legislative and regulatory matters.

"You miss something by never having someone [in Washington] who is actually MasterCard," Ms. Rush said. "We were disadvantaged by that." Officials in the capital "didn't think to call MasterCard. They would think of banks or American Express or Discover. That was really a void we needed to fill."

Now the card associations have a constant presence.

To concentrate their efforts, Ms. Rush and Mr. Smith meet informally each week. Visa and MasterCard have a joint Legal-Legislative Advisory Committee that meets quarterly.

"It's a good deal for our members to have both of us here because we do cover a lot of territory," Ms. Rush said.

Welcomed by ABA

Philip Corwin, director of retail banking for the American Bankers Association, said his organization welcomed MasterCard and Visa into a lobbying arena historically dominated by trade groups.

"It's helpful to have more folks available," Mr. Corwin said. "They can take a different approach. They are specialized."

The ABA is asked to deal with dozens of issues, he said, "but we can't focus every day on credit cards like Visa and MasterCard can."

Pending Legislation

Visa and MasterCard are concerned about a variety of pending legislation affecting bankruptcy, telemarketing fraud, disclosure, and fair credit.

"Clearly, the members are concerned about anything that disrupts the national credit card marketplace," Mr. Smith said.

The two associations have taken issue with both the House and Senate versions of Fair Credit Reporting Act changes.

Many states have begun passing their own fair credit bills, Ms. Rush noted. "We believe there should be strong pro-consumer laws on the books," she said. "But it should be uniform the country. Otherwise it will increase the cost of credit and it will make it less available for consumers."

Where Agendas Diverge

Despite their similar concerns, there are differences in MasterCard's and Visa's agendas.

For example, Mr. Smith sees visa's future determined by how well it can protect its technological edge.

"Over the longer term," he said, "we're very interested in expanding the scope of the card, expanding our ability to apply modern telecommunications and data processing to other aspects of the payment system."

A bill that would allow state governments to permit surcharges could derail this path, he said. "I would argue society as a whole suffers if the government artificially puts road blocks in the way of implementing new technologies."

Convincing the Policy Makers

Last summer, MasterCard surveyed government officials and "opinion leaders" about their perceptions and concerns about credit cards.

"We found out, basically, that most people in the administration and Congress did not really want more regulations on the industry," Ms. Rush said. "They felt that market forces really would be the most effective" form of regulation.

The caveat was the card industry had to do a better job of educating consumers, she said.

But the Washington players were skeptical Visa and MasterCard would do this, Ms. Rush said. They asked, "Why would the industry want to teach consumers to shop around for a better rate on their credit card?

"Because at the end of the day anybody in business benefits from a consumer being smart rather than being uninformed," Ms. Rush said. A savvy consumer chooses a product wisely, doesn't get deep in debt, and as a result, doesn't become a charge-off statistic, she added.

The survey also revealed that politicians on the state and national level were not familiar with the two card associations.

Getting the Word Out

MasterCard responded by orchestrating a consumer outreach program. Ms. Rush prepared materials, including a "Smart Credit Quiz," for members and consumer groups to distribute to consumers.

For its part, Visa has continued its "Choices and Decisions: Taking Charge of Your Life," a consumer education program developed two years ago in cooperation with the U.S. Office of Consumer Affairs and the National Consumers League.

The interactive, multimedia program will be used in nearly 10,000 high schools this fall to teach students how to manage their money, said Stephanie Caracristi, manager of public relations for Visa.

Also, Visa has distributed "Credit Cards: An Owner's Manual," featuring Cathy, the comic-strip character, to Congress and consumers.

Ms. Caracristi said Visa operates these consumer programs from corporate headquarters in San Mateo, Calif. The association also tracks state legislative developments from there.

Visa recently commissioned a study by the University of California-Berkeley, which said California could lose 4,500 of its 21,000 credit card jobs to such states as Colorado, Arizona, and Nevada, if rate caps were imposed.

Jobs as Leverage

Bankers used the study to support their state lobbying and threatened to relocate their card operations. The legislative rate-cap effort was scuttled.

MasterCard reports a similar success story.

In February, MasterCard sponsored a study by DRI/McGraw-Hill, Lexington, Mass., to evaluate state business climates for credit grantors. Colorado, for example, was identified as undesirable because it had restrictions on late fees.

After lobbying by Colorado issuers, the state legislature passed a bill to relax the late-fee rules.

"That was a wonderful victory," Ms. Rush said. "We learned something from it."

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