Rep. Charles Schumer's bid to oust Alfonse M. D'Amato from his New York Senate seat has put the financial services industry in an agonizing position.
Though Rep. Schumer is one of the few Democrats viewed as sympathetic to financial firms, no one in the industry wants to cross Sen. D'Amato, chairman of the Senate Banking Committee.
"I cannot afford to support D'Amato's opponent and risk alienating him," said one banking political action committee director, speaking under the condition of anonymity.
Banks and securities companies already are fretting over the race, which is expected to be among the most expensive of the 1998 campaign.
"It places the industry in an agonizing dilemma," said another financial industry PAC director, also speaking anonymously. "On the wholesale level, at least, we have seen two stalwart allies in both members."
Though strong support from the financial services industry has helped Rep. Schumer build the largest campaign war chest of any House member, Sen. D'Amato has topped his rival's fund-raising efforts.
Sen. D'Amato has $6.8 million in his campaign coffers, compared to Rep. Schumer's $5 million.
From 1991 through 1996, financial services political action committees have contributed $868,371 to Sen. D'Amato and $265,546 to Rep. Schumer. Bank PACs have donated $362,317 to Sen. D'Amato and $72,950 to Rep. Schumer.
The American Bankers Association has already picked Sen. D'Amato, giving him the $5,000 maximum for the primary election. The ABA contributes to only one candidate in each race.
But individual banks will be tempted to hedge their bets if Rep. Schumer wins the Democratic nomination, according to Thomas Mann, director of governmental studies at the Brookings Institution. "They know that Rep. Schumer will be well-funded," said Mr. Mann. "And he's not seen as the enemy by the financial community."
The Independent Bankers Association of America has supported both candidates in the past, but hasn't decided which to back now because both support sweeping financial reform legislation.
"Right now, we have absolutely no use for Sen. D'Amato's stance on financial modernization," said Alex Maroulis-Cronmiller, IBAA's political action committee director. "He's against us on one of our key issues: mixing banking and commerce. He doesn't even want to listen to our position."
To face Sen. D'Amato in the general election next year, Rep. Schumer must first win the Democratic nomination over New York City Public Advocate Mark Green and former vice presidential nominee Geraldine Ferraro.