First Union Corp. is trying to squelch rumors that it sabotaged regulatory relief legislation during a House Banking subcommittee vote two weeks earlier to protect its sweep account business.

Accusations are flying around Capitol Hill that lobbyists for the Charlotte, N.C., company encouraged Rep. Bill McCollum, R-Fla., to tack on a controversial amendment that would exempt 83% of the banking industry from the Community Reinvestment Act.

"We did not request that amendment," a First Union spokeswoman said. "We did not lobby for the passage of the amendment."

Disgruntled supporters of the bill and House staff members, who spoke on condition of anonymity, contended that the bank threw its weight behind the measure in order to block wider competition for its sweep accounts.

First Union objects to a key provision in the bill that would let banks pay interest on business checking accounts beginning Oct. 1, 2001. In the interim, the legislation would expand the number of withdrawals commercial customers may make from money market deposit accounts that are linked to non-interest-bearing corporate checking accounts. (Moving funds between such accounts is known as "sweeping.")

The First Union spokeswoman said the banking company has asked lawmakers to wait and study the proposal for allowing interest on business checking accounts because it could lead to higher costs for small-business customers.

The subcommittee's Aug. 4 approval of the legislation with the CRA rollback angered Democrats and threatens to stop the bill dead in its tracks. House Banking Committee Chairman Jim Leach said the legislation "has no chance of becoming law" in its present form because the CRA exemption would draw a presidential veto. Accusers lack a smoking gun, but some said that First Union lobbyists openly communicated with Rep. McCollum's staff during the CRA vote and alerted several Republican subcommittee members who were absent from the room to come vote for the McCollum amendment.

Joseph L. Seidel, a Williams & Jensen lawyer who represents First Union, said the bank is being unfairly singled out. "There is a lot of bogeyman being created over us not doing anything," he said.

Doyle C. Bartlett, Rep. McCollum's chief of staff, said the congressman came up with the idea himself and has pushed similar measures before. "Regulatory burden relief equals CRA reform in his mind," he said. "McCollum's view is that it helps the bill" because it will draw Republican attention to otherwise lackluster legislation.

Now that the Federal Reserve Board has approved the merger of BankAmerica Corp. and NationsBank Corp., and with shareholder votes near, speculation has intensified about the makeup of the combined company's lobbying team.

Announcements are expected as early as the end of this week. So far the banks have confirmed only that Cheryl A. Sorokin, a 21-year veteran of BankAmerica, will be government policy executive for the combined company.

Word on the Hill is that NationsBank lobbyist J. Mark Leggett will be named lead federal lobbyist. Either Peter V. Davis or Janet W. Lamkin- senior vice presidents for NationsBank and BankAmerica, respectively-is expected to be put in charge of state-level lobbying. Other personnel moves remain unclear. Ms. Sorokin referred a reporter's calls to a spokesman, who declined to comment.

Lobbyist Tricia M. Haisten joined the House Banking Committee as a Democratic staff lawyer Monday. She had been a senior associate at the Williams & Jensen law firm here for more than a year, representing banking clients on Capitol Hill. Previously, Ms. Haisten worked for two House Banking Committee members, first as the banking aide to former Rep. Jim Bacchus, D-Fla., and then as chief of staff and legislative director for Rep. Jim Maloney, D-Conn.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.