Acquisition Would Pair Varying Strategies

Posted July 15, 2005 at 3:52pm

Bank of America’s proposed acquisition of credit card giant MBNA hasn’t raised many domestic regulatory concerns so far or generated the war-room-style lobbying effort that some mergers have produced.

But the likely combination of the two financial services corporations, both with long histories of political giving, has left Washington insiders on Capitol Hill and K Street wondering what the new company’s Washington, D.C., presence will look like.

In some ways, the newly combined company could offer a classic clash of corporate cultures in their Washington operations.

MBNA has a reputation as a GOP-leaning company, according to several lobbyists and Hill aides. Even before the GOP takeover of Congress and the White House, MBNA’s PAC and individual employees gave more than 70 percent of their campaign cash to Republicans, based on data collected by the non-partisan Center for Responsive Politics.

Bank of America, on the other hand, has given almost evenly to both parties in recent years, with a slight edge to the reigning GOP. Before Republicans consolidated their hold on the government, though, Bank of America tipped toward Democrats.

“On the fundraiser circuit, nobody had to tell [MBNA] who the majority party was —they’re always there for Republicans,” said one K Street GOP veteran with experience in banking issues. “If I was at the Senatorial Committee or the NRCC, I’d worry like hell that the BofA takeover doesn’t snuff out the MBNA dependability.”

Terry Francisco, a Bank of America corporate spokesman based at the company’s headquarters in Charlotte, N.C., said MBNA’s political giving has changed in recent years since the company is under new leadership. “Their previous leadership may be more aligned to Republicans,” he said. Indeed, MBNA’s former CEO Charles Cawley achieved the rank of Ranger status for the 2004 Bush-Cheney campaign.

An MBNA spokesman did not return a call seeking comment.

Francisco added that the Bank of America PAC is nonpartisan. “We provide access to people that are meaningful to our business,” he said.

Steve Weiss, a spokesman for the Center for Responsive Politics, said that according to his group’s tallies of political contributions over the past nine election cycles, combining Bank of America with MBNA would produce the top-giving corporation and the twelfth most generous entity overall, mainly behind unions and interest groups.

“The top corporation is FedEx, and if you were to combine the Bank of America and MBNA contributions, they would overtake FedEx as the top corporation,” he said.

When it comes to lobbying, Bank of America and MBNA also have taken divergent approaches. While neither company is especially flashy by Washington standards, Bank of America tends to work more through its trade associations and in conjunction with allies. MBNA, by contrast, tends to be more visible on the handful of issues it prizes, such as bankruptcy reform.

Last year, MBNA reported spending almost $5 million on federal lobbying, while Bank of America reported $354,000.

MBNA also has a history of hiring staff from the Federal Bureau of Investigation. Its top lobbyist, John Collingwood, is a former FBI Congressional liaison, and he works under former FBI Director Louis Freeh, who is now MBNA’s vice chairman for law and government affairs.

MBNA has long retained the Smith-Free Group, and while it doesn’t maintain its own outpost here, lobbyists often work out of Smith-Free’s offices when they take the train in from headquarters in Wilmington, Del. MBNA also recently hired Winston and Strawn, lobbying disclosure forms show.

According to lobbying records, Bank of America has recently tapped the new tax advocacy firm Angus and Nickerson and has also worked with the tax-focused shop Clark Consulting Federal Policy Group. But the company maintains a slim roster of outside consultants.

Bank of America has a two-person office that includes Jeanne-Marie Murphy, Bank of America’s senior vice president for federal government relations, and Edward Hill, vice president for federal government relations.

Murphy said as of yet there are no solid plans as to how the combined company’s D.C. presence will look.

“I don’t think any of those decisions have been made,” she said.

Murphy added that Bank of America, which has a credit card unit, and MBNA have lobbied on many of the same issues and have worked together in the trade associations to which the two belong, including the American Bankers Association.

“On most issues,” Murphy said, “we handle through our office or work with our trade associations and coalitions” as opposed to relying on outside advocates.

One former senior Congressional staffer with expertise in banking and financial services said that when it comes to Washington, “Bank of America has always been fairly quiet.”

“Their style has been more to plug in strategically wherever they think they need to plug in,” this former staffer said. “They’re not shrill, not leading the parade on anything.”

This one-time staffer added that neither is MBNA particularly out front when it comes to Congress. Still, the former staffer said, MBNA has a more recognizable presence in Washington.

One lobbyist who does not represent either company said the combined outfit would be well advised to merge its Washington presence because neither company is top-heavy here.

A GOP political operative with ties to North Carolina, where Bank of America is based, said that what stands out about the bank is how light it is on the lobbying side.

“Everybody always got the sense that they were skinny and cheap, but on the other hand they seemed to get things done,” said this political aide, who requested anonymity.

This operative also said Bank of America had an uphill battle to win the trust of Republican Members because the company’s leadership was viewed as more generous to Democrats.

For the past several years, MBNA’s top issue has been reforming bankruptcy laws. Insiders say the company pushed that agenda aggressively and was a key player in the credit card industry’s coalition for bankruptcy reform. With the passage of a major bankruptcy overhaul earlier this year, the company’s top issues now focus on privacy and data security.

The acquisition of MBNA requires approval by the Federal Reserve and by the Delaware State Banking Commission, Francisco said.

He added that, assuming the acquisition goes through, the combined company would cut an estimated 6,000 employees. No decisions yet have been made about the Washington, D.C., and lobbying operation. MBNA CEO Bruce Hammonds, though, has been named as the top executive in charge of the combined company’s card services division that will be based in MBNA’s hometown of Wilmington, Del.