The California Bankers Association is courting the Western League of Savings Institutions in hopes of a merger. Sources at both groups say the merger idea makes a lot of sense. For starters, industry consolidation has cut both groups' membership rolls. Merging would create a huge regional organization with combined member assets of $680 billion. Also the groups already cooperate on many lobbying and continuing education projects.

"A merger would be a natural outgrowth of these cooperative activities," said Larry D. Kurmel, executive director of the California Bankers Association.

Each group would bring different strengths to a merger. For instance, the Western League, whose members represent 20% of thrift industry assets nationwide, has a strong Washington lobbying operation, while the California Bankers are a more powerful presence in Sacramento.

While the bankers are eager to begin talks on a possible union, the Western League, which represents thrifts in California, Nevada and Arizona, isn't rushing into discussions. At their April 25 board meeting, thrift executives delayed making any decision on the matter.

"They want to take the time to look at issues raised by a merger," said Barbara Timmer, a lobbyist for Irwindale, Calif.-based Home Savings of America Inc. Some Western League members worry that thrifts would lose their independent voice, she said.

Led by state banking associations, a coalition of lenders and various business groups are mounting a last-minute drive to legalize home equity loans in Texas.

For the first time ever, the Texas House of Representatives is expected to pass legislation allowing home equity lending. But with debate on the House floor scheduled to begin Friday, banking groups and their allies are gearing up to fight restrictions sought by the Texas Association of Realtors.

The bankers, who call their coalition the Texas Conference for Homeowners Rights, are hoping to ward off an amendment that would permit home equity loans only to pay for education and medical expenses. Also, they plan to fight restrictions that would prevent lenders from seizing any collateral other than a foreclosed home.

"These are extremely restrictive amendments that would bring relief only to lawyers," said Stephen Scurlock, executive vice president for the Independent Bankers Association of Texas.

The Texas Senate has already approved the legislation. Because the loans are barred by the state constitution, voters also must agree to the change. Polls show the measure would pass.

Sen. Charles Grassley, R-Iowa, has asked the Justice Department to open a criminal investigation into whether a Democratic fund-raiser lied to Congress when he denied promoting a $10,000-a-plate dinner as a chance to influence bankruptcy legislation.

Sen. Grassley, who chairs the Senate Judiciary subcommittee on administrative oversight and the courts, said in a May 2 letter to the Justice Department that William Brandt, the new head of Mercury Finance Co., appears to have submitted false testimony to congressional investigators.

Several bankers and industry lawyers have testified that Mr. Brandt pressured them to attend a Sept. 17, 1996, fund-raiser for President Clinton that also featured Brady C. Williamson, head of the National Bankruptcy Review Commission. Mr. Brandt allegedly told potential donors that if they did not buy tickets their views would not be heeded by the commission, which is preparing recommendations to Congress for reforming bankruptcy laws.

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