Academic journal article ABA Banking Journal

The Making of a Law

Academic journal article ABA Banking Journal

The Making of a Law

Article excerpt

ABA's chief lobbyist, Ed Yingling, reflects on the process, players, and politics leading to the law that finally erased Depression-era rules

Edward Yingling has been running ABA's government relations group since July 1985. Over the ensuing 14 years, he's had one predominating goal-- quest would probably be a better word--to update the antiquated laws that wrapped banks in a cocoon of restrictions and rules.

Actually the quest began earlier. Yingling had joined ABA from a noted Washington law firm where he was a bank lobbyist for many years, working on expanding bank powers.

Yingling, who last fall was promoted to deputy executive vice-president of the ABA, could easily write a book about all that's occurred along the path to financial modernization. Perhaps he will. What you'll read below is a preview, in effect, of that book. It is Yingling's responses to questions from Editor-in-Chief Bill Streeter and Executive Editor Steve Cocheo just after Congress voted to approve the law.

He said at the beginning of the interview that this achievement was not about Ed Yingling, but about all the bankers, ABA staffers, state association executives, and elected officials and their staffs who toiled tirelessly for so long. Quite true--but it's equally true that the passage of this bill represents his life's work to date. New challenges remain, surely. But this was big.

Here are Yingling's observations, edited for clarity and length.

Q. The tenth anniversary of the fall of the Berlin Wall was recently celebrated. Would you agree that passage of S. 900 is the financial equivalent of tearing down the Berlin Wall?

A. The analogy really should be: we'd broken the wall down to rubble but the rubble was in the way. Now we've cleared away the rubble.

Along the road some bankers had said to the ABA leadership, "I can offer what I want to offer today, so modernization is not that important." But we always believed it was important. You may be able to offer what you want today, but you have no idea what the three hottest products are going to be two years from now or five years from now, much less ten years from now. And you may not be able to offer those products if we don't change the law. With this change, banks will be involved in whatever comes down the pike.

Q. What made this happen now after all these years of trying?

A. A lot of credit goes to individuals on the Hill. Sen. [Phil] Gramm and Rep. [Jim] Leach worked on it night and day. Also, we built an alliance with the securities and insurance industries, and that alliance was very critical.

More broadly, for years we had our strategy of going to the agencies every chance we got, going to the courts, going to the state legislatures to get changes. We always thought Congress would come later. In fact in previous years we spent most of the time in Congress protecting the gains made in the courts, with the regulators, and in the states.

We also had the strategy that we would never go backwards. We were the ones who blocked this bill several times in the past. We had gotten to the point where the securities and insurance companies, and to some degree the agents, needed the bill more than we did.

Q. Why was that?

A. Because we had knocked so many holes in the walls separating commercial and investment banking and insurance, we were able to aggressively enter their businesses--in some cases more aggressively than they could enter ours. So first the securities industry, then the insurance companies, and finally the agents came over and said let's negotiate a deal and work together. A lot of what's in the bill--insurance agency language, for example--was actually negotiated out among the different groups.

The agents cut their deal and stepped aside basically. Then the major trade associations for banks, the securities industry, and insurance companies all worked together, even up until the last day in conference when all of us met with [House Majority Leader Richard] Armey and [Senate Majority Leader Trent] Lott. …

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