For Hugh L. McColl Jr., it was money in the bank. On Sept. 13, after an intense, four-year campaign, the powerful CEO of NationsBank Corp. and friend of Bill Clinton saw a dream realized: congressional passage of an interstate banking law that lets McColl consolidate his nine-state empire--and save NationsBank $50 million a year.
But if McColl is less than ecstatic, there's good reason. His bank is getting unwanted attention from the House Energy & Commerce Committee. Chairman John D. Dingell (D-Mich.) plans to hold hearings after the November elections on allegations that NationsBank is forcing customers to accept additional services in exchange for loans and other bank products. The Office of the Comptroller of the Currency is looking into these "tying" allegations as well. Banks may link some products for marketing purposes, but restrictions are still in place for certain types of transactions.
And if that isn't enough, the OCC is investigating NationsBank's mutual-fund sales practices: A former employee and three customers have filed lawsuits accusing the company of deceptive marketing. McColl wouldn't comment for this story, but a spokeswoman says the bank is cooperating with the OCC in the tying probe and will defend itself against the mutual-fund claims.
Considering McColl's reputation as a Washington insider and his company's generous political contributions (chart), NationsBank is a surprising target. NationsBank has given $437,000 to congressional candidates running this fall, and McColl relishes his status as a Presidential pal. He sat next to Clinton during last spring's National Collegiate Athletic Assn. basketball championships in Charlotte, N.C., where NationsBank is headquartered, and he's one of a small group of CEOs that Clinton regularly turns to for advice.
McColl has long been an Inside-the-Beltway player. He kept interstate banking alive after the measure was stripped from a banking overhaul bill in 1991. Following that setback, NationsBank's chief lobbyist, J. Mark Leggett, headed a group of six big banks that tirelessly promoted the legislation on Capitol Hill. Last year, when opponents tagged the measure a "NationsBank bill," McColl broadened his campaign by folding his "Gang of Six" into the Bankers Roundtable, a trade group for the nation's largest banks. "That was a very smart move," says John S. Rippey, a Roundtable lobbyist.
SAVVY LOBBYING. Leggett also stroked the enemy. Kent Brunette, a lobbyist for the American Association of Retired Persons, penned a letter opposing the bill's lack of consumer protections in August but decided not to send it to the Hill after Leggett promised to help develop industry guidelines for providing low-income customers with inexpensive services.
Savvy lobbying, however, won't keep McColl off Dingell's hot seat this fall. The powerful Hill veteran rarely misses an opportunity to slam bankers for overly aggressive tactics. And the bad publicity about NationsBank's mutual-fund woes could add momentum to a legislative drive to give the Securities & Exchange Commission more oversight of bank-securities operations. The interstate battle is won, but for McColl, there are plenty of fights ahead.