A deal announced with great fanfare five days ago to grant New York's Citicorp broad banking powers in Maryland in exchange for a promise of jobs now appears seriously threatened by state banks' harsh criticism.
At the same time, the deal poses dangers for a separate regional banking bill that would ally Maryland with 12 other states in a compact providing four years of protection for state banks from big money-center banks such as Citicorp's subsidiary, Citibank.
The two bills, which are top priorities of the administration of Gov. Harry Hughes, may fail in the 1985 General Assembly, key Senate leaders said today.
Legislative support for the agreement with Citicorp has withered badly under criticism from local banks.
The harsh attacks on the agreement, under which the giant New York bank would establish a 1,000-employe credit card service center near Hagerstown, have prompted Senate President Melvin A. Steinberg (D-Baltimore County) and others to call for legislative restrictions on Citicorp's freedom to establish branch banks in Maryland.
Steinberg said Hughes' deal with Citicorp, announced five days ago, "poses tremendous jeopardy" to the regional banking bill. The measure would allow Maryland banks to participate in limited regional banking for the next four years, after which the state would be opened to all out-of-state banks.
"Additional restrictive language" is needed if the agreement and the regional banking bill are to survive, said Steinberg, who endorsed the Citicorp deal last week.
At his leadership meeting early today, Steinberg warned that criticism from Maryland banks about the agreement with Citicorp was so intense that it threatens to send the deal and the regional banking bill "down the tubes," according to several at the meeting.
Aides to Hughes, worked feverishly today to preserve the Citicorp agreement by drafting restrictions on the bank's ability to acquire Maryland institutions or acquire banks in other states in the regional compact.
The amendments with which Steinberg plans to link the Citicorp bill and the regional banking bill also will spell out the terms of Hughes' agreement with Citicorp, according to Lou Panos, the governor's spokesman. The Senate Finance Committee abruptly canceled a hearing scheduled for today on the Citicorp agreement to give the governor's staff time to massage the amendments.
"The amendments are designed to ensure no unfair competitive advantage goes to any financial institution, new or old, big or small," Panos said.
But William K. Weaver, the veteran lobbyist here for the Maryland Bankers Association, vowed to work overtime to kill the regional banking legislation so long as it includes the Citicorp agreement.
Maryland's 90 banks, whose combined assets are dwarfed by Citicorp's $140 billion, oppose letting the aggressive New York bank into the state because they fear takeovers and unfair competition, Weaver said. Citicorp is now restricted to one limited-service bank in Baltimore County.
"We see no way to compromise on Citicorp," Weaver said. "This is a one-bank bill any way you slice it."
However, Citicorp lobbyist Franklin Goldstein said opening the state to a new competitor would be good for consumers in the long run. "Maryland banks are portraying us as the heavy, but the average man thinks this is good competition," Goldstein said. "You can call us the Big Bad Wolf, but we're a legitimate bank. What are they afraid of other than competition?"
Goldstein reiterated Citicorp's pledge not to merge with or acquire Maryland banks during the four years of regional banking. The regional banking bill would establish a compact among 13 southeastern states and the District of Columbia under which banks in each of the jurisdictions involved would be permitted to buy banks in any of the other jurisdictions that granted reciprocal rights.
Nor would Citicorp oppose incorporating such a ban or one against it leapfrogging around the region into the banking bill, Goldstein said.
Goldstein would not comment, however, on some legislators' demands that the bill include limits on the opening dates or location of Citicorp branches around Maryland.
Steinberg and his aides raised the possibility of such limits today, saying the legislature could restrict Citicorp branches to so-called "enterprise zones" or link the opening of those offices to employe hirings at the Hagerstown service center.
"We have to narrow down the window . . . we're creating for Citicorp," Steinberg said.