What is it about banking policies? Savings institutions are finally coming together, but now the commercial banks are splitting farther apart.

This irony is ominous for banking leaders who are facing tough challenges in an era when the industry's political power is on the decline.

Unity, is no sentimental objective. A divided industry cannot muster the political leverage to pressure Congress into making the changes needed to modernize the system.

Some Painful Blows

Scandals and insolvencies already have weakened the credibility of the financial industry in Congress. Increasing factional squabbles among commercial banks are making the situation worse.

Community bankers are off in one corner cutting deals with consumer lobbies, and the big regional banks are in another trading with the hated insurance interests.

Oh for the good old days when the only thing the American Bankers Association had to worry about was the rift between its small-bank and large-bank members.

Will the commercial bankers get their lobbying act together?

Optimists believe the current confusion results only from a lack of leadership.

Pessimists insist the banking lobby's problems run deep; that the ABA no longer presides over a homogenous banking industry, but rather a loose federation of companies with incompatible interests.

While the commercial banking industry is jolted by dissension, savings institutions are combining their political assets by merging the National Council of Community Bankers and the United States League of Savings Institutions.

To work, Of course, this is untested partnership will require perseverance and dedication. But at least it suggests a commitment to a principle that seems distant to the splintered commercial banking sector.

Perhaps it is easier for savings institutions to collaborate at this time because their aspirations are more common and basic than commercial banks: survival, for instance.

What the Thrifts Learned

The intramural skirmishes over an independent regulator, outside ownership of savings institutions, and what qualifies as a thrift are long gone.

Today these troubles seem puny compared with the fierce day-to-day pressures of staying solvent and the monumental task of retrieving the image of reliability that was the industry's hallmark of other years.

Maybe, as some suggest, commercial bank factions simply have not experienced the depth of hardship needed to force them to submerge self-interest in favor of the common good.

But then, how can you measure progress based on some kind of misery index? The world of financial institutions, with its shifting mix of political and economic forces, defies one-sentence descriptions.

Right now, only a few general observations about contemporary events seem consistent with the lessons of banking history.

One is that the U.S. banking system desperately needs to persuade Congress to broaden banks' powers to help them catch up with their global competitors.

Another is that only an alliance of savings institutions and commercial banks can produce the political muscle to accomplish this.

And finally, commercial banks are especially important to the coalition because of their economic power, which is derived from control of trillions of dollars in assets.

All this suggests that if you are part of the savings industry you have one eye on your own experiment and the other anxiously trained on your sister institutions, where talk about goals and strategies may be equally important to your future.

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