Citigroup Inc. would have begun a significant restructuring in early 2000 if financial reform had not been enacted this year, its top lobbyist said this week.
When regulators approved the merger of Citicorp and Travelers Group Inc. last year, they gave the combined company two years to sell its insurance underwriting business because bank holding companies were barred from that activity. Three one-year extensions of that deadline were possible.
Most people figured that gave Citigroup plenty of time to win a change in the law. But Roger Levy, Citigroup's senior vice president of federal government relations, said that if financial reform had not been enacted this year, the company planned to start moving to preserve its insurance underwriting powers.
"We would have had to go to a plan B ... by the turn of the year," he said Monday. "Implementing a plan B would have taken almost a full year."
Plan B involved exploiting a loophole, such as using its Delaware state bank with grandfathered insurance underwriting powers. "Our compliance, incidentally, would have been a restructuring, not a divestiture," he said.
Larry LaRocco, managing director of the ABA Securities and ABA Insurance associations, plans to leave March 1 to become chairman of his own lobbying firm. The former House Democrat from Idaho will split time between here and Portland, Ore. Mr. LaRocco helped form the securities affiliate of the American Bankers Association in 1995 and modeled the insurance affiliate after it two years later. Mr. LaRocco said in a statement that he had worked on financial reform inside and outside of Congress for years and that its enactment provided an opportunity to pursue new challenges.
Beth L. Climo, the ABA's group director of financial industry affairs, will succeed him. Ms. Climo joined the association in 1996 and previously headed legislative affairs for the Federal Deposit Insurance Corp. and the Federal Housing Finance Board.
The American Bankers Association has shot up to 11th on Fortune's latest annual ranking of the most influential lobbying groups.
After losing the war against credit unions on Capitol Hill last year, the ABA had plummeted to 20th on "The Power 25" while the Credit Union National Association skyrocketed to eighth. CUNA settled back to 18th this year, but ABA chief lobbyist Edward L. Yingling said his group's stature rose this year because it helped advance legislation on financial reform, the year 2000, and other issues.
The magazine's ranking of 114 interest groups was based on survey responses from 427 Hill staffers, White House aides, lobbyists, and other Washington insiders. Among other financial industry groups, the Independent Community Bankers of America sank 17 places, to 58th; the Independent Insurance Agents of America dropped to 26th, from 12th, and the Securities Industry Association fell to 51st, from 33rd. America's Community Bankers (74th) and the American Financial Services Association (87th) also made the list.
The Financial Services Council is expected to disband by early December. One clear signal came last week when acting president Brian C. Conklin announced he will join Washington Counsel PC, a law and lobbying firm here, on Jan. 1. "We have done our job here at the Financial Services Council," he said, referring to the recent enactment of reform. Mr. Conklin would not say for sure, however, whether the group would dissolve. He said the group's board is weighing other possibilities, such as merging with another association. A decision will be made in the next few weeks, he said.