WASHINGTON-When Charles E. Schumer defeated incumbent Alfonse M. D'Amato in New York's senatorial election last November, advocates of financial reform cringed.

More important than Sen. Schumer's stance on the issue was the chain reaction his upset victory caused: the dethroning of Sen. D'Amato as Banking Committee chairman and the crowning of Texas Sen. Phil Gramm.

Weeks earlier, Sen. Gramm had almost single-handedly killed a bill to let bank, securities, and insurance firms merge.

But just half a year later, Sen. Schumer is boldly predicting that a reform bill will become law in 1999. "I've never seen the timing more ripe," he said in an interview.

Such a prediction might mean little coming from a freshman senator, let alone a junior Democrat on the Republican-led Banking Committee.

But the blunt-talking Brooklyn native with the jack-o-lantern smile and the perfect SAT scores is no stranger to financial services, or to governing.

A career politician, he was elected to the New York State Assembly at 23, just months after graduating from Harvard Law School. At 29 he entered Congress and immediately joined the House Banking Committee, where he spent the next 18 years.

"When I first came here (to Capitol Hill) I was an opponent of merging banking and securities," he said. "I thought the cultures would clash."

But now he says companies like Citigroup Inc. "have every right to try." "That's capitalism," he said.

On the issue of reform legislation, Sen. Schumer wants banks' underwriting of insurance and securities to be walled off in affiliates of their holding companies. That structure, he said, would keep federally insured and uninsured dollars separate. It also would better insulate financial services from politics.

"One of the seminal moments for me was being a congressman during the S&L crisis," he said. "What I saw was that when the Treasury controlled the regulators," Treasury officials could be "very manipulative.

"I don't think they would under Bill Clinton or (Treasury Secretary) Bob Rubin, but I don't know who's going to be President next. They sure were under Ronald Reagan."

Sen. Schumer's position puts him at odds with the Clinton administration and with Mr. Rubin, a good friend whom he says he once tried to "dragoon" into running for governor of New York. The White House wants banks to be able to underwrite insurance and securities through direct subsidiaries.

But the New York Democrat's stance squares well with that of Sen. Gramm, the Banking Committee's Republican chairman.

"I get along with Phil Gramm," Sen. Schumer said. "We don't agree on some things, but we can always have a sort of brain-to-brain conversation."

The two senators have clashed over the Community Reinvestment Act, which Sen. Gramm would like to scale back.

"Not a single New York banker has lobbied me to jettison CRA," Sen. Schumer said. "Perhaps their capital would get a greater return from somewhere else, but it's not a money-loser to them anymore. In fact, some institutions, pushed by CRA, have actually started making lots of money by making loans in places they never would have thought of making loans before."

His support for the CRA is not boundless, however. Sen. Schumer called community activists' plans to intensify CRA requirements "pie in the sky." He also opposes applying the CRA to insurance and securities firms.

"The whole rationale of CRA is banks get something from the federal government, and CRA is basically what they give back," he said.

All in all, however, Sen. Schumer expressed confidence about enacting financial reform. "I think we'll have a bill this year," he said - "a signable bill."

He is less upbeat about bankruptcy reform.

"I believe we should tighten it up," he said. "But you know, we should be tightening it up more against the wealthy, who use it and keep their riches, than against the guy making $24,000 (who) is under a mountain of credit card debt."

Inadequate credit card disclosures are one factor behind the record number of bankruptcy filings, he said.

Legislation he has sponsored would require credit card firms to list, on each monthly statement, the number of months and dollars it would take a customer making the minimum payment to pay off his or her entire balance.

"I am utterly appalled when banking institutions, which say that they are free-market, oppose real disclosure," Sen. Schumer said. "That means to me that they're not really free-market, they're just profit-making. So I'm going to fight more for credit card reform."

In some respects "Chuck" Schumer is an unlikely player on the financial services scene.

The rumpled son of a bug exterminator, he has adorned the waiting room of his Senate office with memorabilia demonstrating his connection to labor, civil rights, and gun control issues.

One photo shows him flashing the victory sign and holding hands with his close friend Hillary Rodham Clinton, who campaigned vigorously for him last year.

Except for the green North Fork Bank pen lying next to his sign-in book, nothing in the room suggests an 18-year commitment to banking issues.

But Sen. Schumer, 48, claims deep roots in financial services.

"I'll never forget when I was a freshman," he said. "I went to Mayor Koch and Gov. Carey and I said, 'What committees will help New York?' And they said 'Banking,' because ... there was no New York City member on it. So I get on it, and I try to study the issues."

Shortly thereafter the young congressman was invited to a lunch hosted by the chief executive officers of Chase Manhattan Bank, Citibank, Morgan Guaranty, and Chemical Bank.

"Their basic pitch to me was, 'Get rid of Glass-Steagall, because New York is the center of the banking industry and it's bad for New York City,'" he said.

Little has changed in 18 years.

To this day, however, Sen. Schumer remains a bit miffed about the lack of bank support for his underdog election campaign.

"When Al D'Amato proposed caps on credit card interest rates (and ATM fees), I didn't. I opposed it," he said. And yet "the banks all supported my opponent."

Political action committees run by banks, thrifts, and credit unions gave then-Rep. Schumer $40,000 in 1998, only a third of what they donated to Sen. D'Amato, according to the nonprofit Center for Responsive Politics.

National bank, thrift, and credit union trade groups stiffed candidate Schumer entirely. The Credit Union National Association was shrewd enough to contribute $5,000 after the election to help pay down his campaign debt.

Securities firms also sent more PAC money Sen. D'Amato's way, but they still contributed $80,000 to candidate Schumer.

Like the securities firms, Sen. Schumer believes the Securities and Exchange Commission should play a bigger role in regulating bank activities.

"Why is money flocking to the United States? Because people feel our markets are on the level. And why are markets on the level? Because the few rogues who would try to invade are usually caught by the SEC," he said. "The SEC has been one of the greatest friends our securities markets have had."

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