On a day when legislation that would provide sweeping deregulation for Maryland's lending institutions passed the Senate with ease, the state's banking lobby learned that its version of the bill has no chance of passing the House of Delegates and might be killed.
Even before the 32-to-12 Senate vote, members of the House Economic Matters Committee, which will now consider the legislation, had decided they want a more consumer-oriented bill, if they approve anything at all.
"We may have a bill this year," said chairman Frederick C. Rummage (D-Prince George's), "but only if we change what the Senate passed considerably. Their bill is unacceptable."
Within hours of the Senate action, Gov. Harry Hughes, whose own bank deregulation proposal has been ignored by both houses, met with House leaders and offered eight amendments, all designed to cut down on the latitude banks would have in making loans.
"There is still an awful lot of work to do if we're going to get anything worthwhile through the House," sighed banking lobbyist William K. Weaver, who made a beeline for the office of House Speaker Benjamin L. Cardin's as soon as his version of the bill was safely past the Senate. "I hope the House realizes that if the bill is watered down, we won't be able to compete for business with banks in Virginia and Delaware that already have these laws on the books."
The bill passed by the Senate today, after an acrimonious debate, would authorize banks to charge a variety of fees and loan charges. Among them would be: credit card membership fees; fees for transactions made with credit cards, including travel purchases, legal work and loans; late payment charges; variable rate loans and compound interest rates; securing second mortgages by credit or bank cards, and elimination of the 25-day "float" or grace period before which interest charges can begin.
During a two-hour meeting in the governor's office this afternoon, Hughes, Cardin and Rummage agreed that the Senate bill is much too broad. The governor's amendments would restore the 25-day float; limit increases on variable rate loans to 1 percent every three months; prohibit personal lines of credit with credit or banks cards; limit fees to one annual membership charge; give borrowers a grace period to pay off balloon payments, and penalize lenders who overcharge borrowers.
"I thought we had solved this problem with the bill we passed last year," said Rummage. "We bled for that bill and now we have to go through it again."
Cardin, who did not like last year's bill that raised interest rate ceilings to 24 percent, predicted "substantial changes from what the Senate sent over. There are serious problems, but I would like to get this over with this year."
The danger, from the bankers' view, is that the gap between the Senate and the House might not be resolved, and the legislation could end up being held for summer study.
"If they give us a credit card fee but make doing anything else impossible, we're probably better off with nothing this year," Weaver said.
The banks have argued strenuously the last two years that the looser laws in Virginia and Delaware are costing Maryland business--four banks have moved to Delaware--and insist they need relief to remain in business.
The banks' chief spokesman this year has been Sen. Jerome F. Connell (D-Anne Arundel), the cosponsor of the banks-drafted bill and the chairman of the committee that sent the bill passed today to the full Senate.
Connell argued that anyone who opposed the bill was hurting Maryland's business climate and, in the long run, the Maryland consumer.
Sen. Gerald W. Winegrad (D-Anne Arundel) disagreed, saying, "If we pass this bill, we should put up a sign in our banks saying, 'Caution, you may be subject to robbery in this bank--by the bank.' "