Banks Ask Clinton to Ease Rules : Finance: An industry lobbying effort will also seek more sympathetic regulators. Key congressional Democrats may oppose the campaign.

The banking and thrift industries, opening a major lobbying campaign, called Monday on President-elect Bill Clinton to move immediately after his inauguration to ease regulatory burdens on financial institutions and to choose officials who will take “a more balanced approach to bank supervision.”

Six powerful financial trade groups want Clinton to ease regulations through administrative action and to push for changes in banking laws as part of the economic stimulus package he will send to Congress in the first 100 days of his Administration.

The bankers are mounting a determined challenge to reverse portions of the major banking legislation of recent years, passed by a Democratic Congress in response to the scandals surrounding the collapse of hundreds of failed savings and loan associations.

In Monday’s letter, the groups urged Clinton to take action “in the first few weeks of your Administration to promote the flow of credit to businesses and consumers, thereby enhancing job creation and economic growth.”

But they could run into tough opposition from key Democrats in Congress, including Senate Banking Committee Chairman Donald L. Riegle (D-Mich.) and his House counterpart, Rep. Henry Gonzalez (D-Tex.), who have both taken a tough line in favor of strict regulation.

“I hope President-elect Clinton does not take the banks’ arguments at face value,” Gonzalez said. “The truth is that all too many banks are taking the easy route of investing in Treasury securities rather than putting in the time and effort required to make a consumer loan. We must be cautious about removing the seat belts and allowing the car to run headlong into the intersection.”

The financial industry forms coalitions from time to time, but it is unusual to mount a full-fledged campaign to influence a new President’s policies even before he takes office. “The letter demonstrates a tremendous concern about the need to do something in this area,” said Edward I. Yingling, director of government relations for the American Bankers Assn.

The banking groups want Clinton to:

- Tell regulators to accept traditional “character loans” at banks--loans based on a lender’s personal judgment of borrowers--rather than insisting strictly on collateral.

- Create a special appeals process for bankers hit with regulatory enforcement actions.

- Discourage regulators from imposing stringent accounting rules on banks.

- Support legislation reducing the $1-million-a-day maximum penalties for violating banking laws.

- Ask for repeal of the legislation that requires regulators to set nationwide standards for bank internal controls, credit rules and loan documentation procedures. The bankers’ letter to Clinton said “this micro-management operates as a ‘straitjacket’ on bank operations.”

On taking office, Clinton will have to choose between two drastically different views of the banking world.

The bankers and their advocates insist that business is suffering from a credit crunch because bankers are burdened by excessive regulation and harsh laws preventing them from making loans.

However, critics in Congress and among some consumer groups fear any easing of regulations. They warn that some weak banks with big portfolios of real estate loans could collapse, just as many thrifts tumbled into insolvency.

“We’ll be there to ask the new administration not to relax the standards for safety and soundness or the strength of consumer laws,” said Michelle Meier, Consumers Union’s counsel for government affairs. “The reforms put on the books are critical to prevent future taxpayer bailouts.”

Clinton’s appointments will be crucial. He will select the Comptroller of the Currency, the director of the Federal Deposit Insurance Corp. and the head of the Office of Thrift Supervision--all of the top financial regulators with the exception of the chairman of the Federal Reserve Board. Alan Greenspan’s term in that job will continue.

The bankers, of course, want the President-elect to pick officials sympathetic to their needs. But the Senate Banking Committee--with the Democrats prevailing in a party-line vote--rejected the nomination of Robert Clarke early this year for another term as comptroller because they said he wasn’t sufficiently tough in his scrutiny of troubled Texas banks.

The industry is staffing up for bruising policy battles.

Beyond its own active and experienced Washington lobbying staff, the American Bankers Assn. is going outside for two heavyweight lobbyists: Charles Manatt, former Democratic Party chairman and a law partner of Clinton campaign chairman Mickey Cantor; and Thomas Boggs, a law partner of current Democratic Party Chairman Ron Brown.

Manatt and Boggs have “long involvement in the party and tremendous relationships” with members of Congress, said Yingling.

The bankers have designated Feb. 1 to 5 as “Cut the Red Tape” week. Bankers will visit Washington, and state bank associations will conduct local meetings and press conferences in a grass-roots campaign to garner support.

Monday’s letter to Clinton was signed by officials of the American Bankers Assn., the Consumer Bankers Assn., the Independent Bankers Assn. of America, the Assn. of Bank Holding Cos., the Assn. of Reserve City Bankers, and the major thrift trade group, the Savings and Community Bankers of America.