At least six corporations that actually supported a bill to create a [WORD ILLEGIBLE] agency for consumer protection [WORD ILLEGIBLE] defected outright or have diluted their strong endorsement of the measure in the last month.

The companies say their reconsideration was prompted either by misunderstanding of the scope of the consumer bill or that their commitment never wnet beyond support of the concept of the consumer protection. But the [WORD ILLEGIBLE] occured in the midst of one of the most intensive [WORDS ILLEGIBLE] undertaken by businesses and [WORDS ILLEGIBLE] of the bill have charged that the [WORDS ILLEGIBLE] pressure of was accompanied by [WORDS ILLEGIBLE] of economic blackmail [WORDS ILLEGIBLE] the business [WORDS ILLEGIBLE] deny it.

However, several corporations and trade associations acknowledged they asked [PARAGRAPH ILLLEGIBLE] new corporate support for the bill have been hindered. The measure speaked through the House Government Operations Committee by one [WORD ILLEGIBLE] in May but its chances of going to a floor vote soon are questionable.

Among the firms who have withdrawn or modifyied their support of the bill are Connecticut General Life Insurance Co., of Hartford. Amfac Inc., of Hawaii, GRT Corp. of California, Raveler Hosiery and Dansig Designs of New York and Alpha Beta Corp., of California. Among the firms whose potential support was lost because of lobbying pressure, according to the coalition, is the J.C. Penney Co.

This overkill like I've never seen. Why they (the business lobbyists) are [WORD ILLEGIBLE] out the big guns for this little agency. I'll never understand," said Tina Hobson, executibe-director of the coalition.

Mark Green, director of Public Citizen Congress Watch, said, "the level [WORD ILLEGIBLE] and abstration is unbelievable. They apparently want to strike a symbolic blow at the throat of [WORD ILLEGIBLE]

The object of a mimeograph blitz from both sides and increasing hyper- [WORD ILLEGIBLE] a seven-year-old proposal to create a $15 million agency to intervene on behalf of consumers before the government agencies and to challenge adverse decisions in the courts.

Reoponents of the bill argue that it would save money by consolidating consumer offices in 37 different agency and President Carter endorsed the legislation in a special message, citing it as an example of streamling government.

Leading the sampaign against the bill are the U.S. Chamber of Commerce, the National Association of manufacturers (NAM), the Grocery Manufacturers Association and the Business Roundtable, an influential association of 160 of the nation's biggest corporations.

Joining them individually have been some of the largest corporations, including General Motors and Procter & Gamble, and hundreds of other firms, whose arguments against the bill - made personally and by mail and telephone contact - generally are that it would create a new, costly level of bureaucracy, that it would be harmful to business and that it would usurp existing oversight responsibility of Congress and the regulatory agencies.

In one letter to NAM members, board chairman R. Heath Larry warned that the administrator of the proposed agency would be "vested with unprecedented power . . . to personally determine what he deems to be the 'consumer interest.'"

Memoranda mailed to businesses by NAM and other trade associations also warned that the courts would be overburdened by litigation generated by the agency, and that the agency's investigate powers would compromise private financial data and manufacturers' trade secrets.

Supporters of the bill say those warnings are distortions of the agency's proposed powers.

The only specific allegation of threatened economic sanctions cited by advocates of the bill involves Blue Cross, which, according to a government consumer affairs source, complained several times that General Motors and Procter & Gamble had threatened to withdraw business.

Blue Cross insures about 750,000 GM workers, and about 50,000 Procter & Gambler employees are among the health insurance firms's 83 million policyholders.

"They were talking about economic sactions a number of times. There's no question they were under tremendous pressure," the source said.

Both Procter & Gamble and GM denied they threatened to withdraw business from Blue Cross.

A Procter & Gamble spokesman in CIncinnati said the frim contracted Southwest Ohio Blue Cross and asked for a "clarification" of Blue Cross Association President Walter J. McNerney's endorsement of the bill.A GM spokesman said, "I think they were falsely extrapolating from the squawk we made."

In a letter to Carter, McNerney subsequently said his endorsement of the consumer bill had been a personal one, and was not intended to reflect the members of Blue Cross.

Moreover, Charlotte Creson, senior director of consumer affairs for Blue Cross, denied yesterday that anyone in the association received threats of economic sanctions.

She said, however, that client businesses and trade associations have complained to the associations and the presidents of the 69 Blue Cross non-profit corporations about Blue Cross endorsement of the consumer agency.

"We didn't say we supported any particular bill. We support the principle, and we have not backed off that," Crenson said.

She said that whiel warnings of sanctions could be implicit in a client's complaints, she knew of no overt threats received by any Blue Cross official.

Hobson and William Lovett co-director of te coalition, described the business lobby's campaign as a natural repulsion to the consumer movementa and the ougrowth of a "slow season with nothing much more to do than take a symbolic stand." But Frank McLaughlin, acting director of the Health, education and Welfare Department's consumer affairs office, said it reflects a growing centralism of industry's legislative policy.

For a decade, McLaughlin noted, business interests have advanced a states-rights argument against consumer protection reform, and deployed their lobbying forces among state legislatures to fight new laws.

"They found out that even though they had tremendous clout in Washington, they could not physically monitor so many local legislatures," mcLaughlin said. "So they decided to cut the state regulations adrift and go back to federal legislation, to preempt the state authority.


The natural thing to rally around was the bill."