The Senate Banking Committee held a whirlwind of meetings last week with regulators and lobbyists in preparation for its June 17 hearing on financial reform legislation.
Republican and Democratic staffers met with Federal Reserve Board General Counsel J. Virgil Mattingly Jr. and securities industry lobbyists on Wednesday; insurance industry officials on Thursday; and banking lobbyists and Treasury Under Secretary John D. Hawke Jr. on Friday. Meetings are slated this week with more bank, thrift, and insurance regulators, as well as with thrift and consumer lobbyists.
Many committee staffers are trying to play catch-up on a complex issue, their guests said.
David J. Pratt, chief lobbyist for the American Insurance Association, said committee staff wanted to know if insurance lobbyists could mediate the feud between the Fed and Treasury. "We said no," he said. "We can't. We aren't relevant to them."
Edward L. Yingling, chief lobbyist for the American Bankers Association, said his meeting with staffers focused on the controversies embedded in the legislation. "I didn't sense any great enthusiasm for moving the bill this year," he said.
In the month since the House approved its version of financial reform, the Independent Bankers Association of America's opposition has weakened.
"There is a little bit of a split in the IBAA right now," admitted Kenneth A. Guenther, executive vice president.
Officially, the IBAA remains opposed to the bill. Along with the American Bankers Association and the Bankers Roundtable, the group sent a letter June 2 to Senate Banking Committee Chairman Alfonse M. D'Amato blasting the bill as "flawed."
But the united front is starting to show some cracks.
For example, community bankers back the bill's changes to the Federal Home Loan Bank System and support a ban on mixing banking and commerce, Mr. Guenther noted.
And the IBAA executive committee quietly changed its position on the controversial issue of bank operating subsidiaries after meeting with Fed Chairman Alan Greenspan in late May.
Mr. Greenspan supports the bill's limits on operating subsidiaries while the Treasury Department and most of the banking industry have lobbied against the legislation because it does not grant full financial powers to these subsidiaries.
"We are now with Greenspan," Mr. Guenther said. "You should not run certain high-risk activities through the operating subsidiaries because this puts the deposit insurance funds at risk."
The ABA's Mr. Yingling said the IBAA's shift on the operating subsidiary could hurt next year when Congress tackles the issue again. "I don't think it will make a difference this year," he said. "In the future, it is going to add some oomph to the Fed position."
Colleagues have deluged banking lobbyist Richard F. Hohlt with smart- aleck phone calls since the June issue of Washingtonian magazine spotlighted his new home in Alexandria, Va.
Mr. Hohlt and his wife Deborah bought a two-story, brick Colonial on Kent Road with a view of the Potomac River for $922,000, according to the magazine.
"'How'd you afford that?'" he quoted the jokesters. "'Can we have our next lobbyists' party there? How could such an expensive house have such terrible shrubbery?'"
Touting his negotiating skills, Mr. Hohlt said the purchase price was lower than reported. But he made clear that the move was bankrolled by his wife, who is director of public affairs for pharmaceutical giant Eli Lilly and Co.
"I never could have afforded it without Prozac sales," Mr. Hohlt quipped.