WASHINGTON -- When President Bush griped publicly last Tuesday about the high interest rates of credit cards, it was like a mosquito buzzing in the ear of the banking industry -- annoying but not particularly worrisome. But when the Senate responded the next day by voting to cap credit-card rates at 14 percent, the buzz suddenly sounded more like a chain saw.
What happened next was a textbook display of power in action by an aroused banking industry -- five days of faxing, phoning, meeting and grass-roots bludgeoning, with a few assists from a backpedaling Bush administration. By yesterday Congress was meekly back in its corner, rethinking the next move. Just like that, the chain saw had been changed back into a mosquito, and industry forces were marshaling their considerable strength for the final, killing swat.
"Their lobbying concept is basically that of a steamroller," said an exasperated Edmund Mierzwinski, lobbyist for the U.S. Public Interest Research Group, one of several consumer organizations supporting the cap with meager resources. "They're rising up with fat campaign contributions and false advertising, and they do an excellent job at the grass roots, I'll hand them that."
Only last week banking lobbyists were themselves feeling steamrolled. Wednesday afternoon's Senate vote seemed to come from nowhere in a fevered climate where both Congress and the White House were grasping for anything to show that they were battling to boost the economy.
"At the time, it appeared to be a juggernaut gaining such tremendous momentum that it might not be stopped," said Fritz Elmendorf, spokesman for the Consumer Bankers Association, one of several industry groups that joined in the fight. "We were caught by surprise, as everybody was."
But even before the measure had been voted on, Mr. Elmendorf's organization had its fax machine in gear, churning out a lobbying alert to its 700 member banking and thrift institutions. The message: Contact your senator.
Also stirring was an old coalition of some 15 to 20 organizations that had banded together to snuff out talk of credit-card interest caps back in 1988. "That group sort of reconstituted itself immediately, almost 20 seconds after the legislation passed," said Diane Casey, spokeswoman for the Independent Bankers Association of America.
The Bush administration, embarrassed that the president's call for voluntary rate cuts had brought on the legislation, had already gotten an earful from the industry. What made it perhaps even more embarrassing was that the president had made the statement almost as an afterthought, inserting it into his speech at the last moment.
To atone for the blunder, Treasury Secretary Nicholas F. Brady began working the phones in a fury.
Acting in consultation with Alan Greenspan, Federal Reserve chairman, and Michael J. Boskin, chairman of the president's Council of Economic Advisers, Mr. Brady began a lobbying blitz Wednesday night that continued into the weekend. He personally contacted members of the House and Senate banking committees and the leadership of both houses, aides said.
On Thursday morning, the Independent Bankers organization fired off Federal Express packages to all 1,200 member companies. But neither the strategy nor the grass-roots effort really came together until Friday.
The day began with a morning meeting of the impromptu anti-cap organization, whose two dozen or so members gathered at the Washington headquarters of the Association of Credit Bureaus. The coalition grew to some 70 lobbyists by 2 p.m., when the group met at the American Banking Association's building.
Out of this meeting came the key to the bankers' strategy: "In addition to getting everybody in the banks involved, we wanted to go to the merchants that rely on credit cards," Mr. Elmendorf said. The argument was that a hastily imposed credit-card cap could become the Grinch that stole Christmas, the season many retailers depend upon for more than half their annual sales.
The banks also put out the word that tens of thousands of lower-income cardholders could lose their credit. The result was a barrage toward Capitol Hill that as of yesterday showed no sign of a letup.
One lawmaker feeling the pressure was Representative Esteban Torres, D-Calif., chairman of the House banking subcommittee on consumer affairs. He said his phone lines have been jammed with calls from "Pennsylvania, Ohio, as far away as Idaho" complaining that if the cap goes through, students, the elderly poor and other high-risk borrowers would no longer be able to get credit.
Despite those pressures, Mr. Torres has adopted a compromise position he hopes to sell to his committee and the rest of Congress: a nine-month study of interest rates by the General Accounting Office and the Congressional Budget Office that would recommend to Congress by next Oct. 1 whether a cap should be applied.