Senate Panel Likes Early Aid For Weak Banks
WASHINGTON - The Senate Banking Committee has endorsed a plan by regulators to forestall failures by injecting federal aid into troubled banks and thrifts.
The panel said it would encourage such "early resolutions" as long as government assistance was accompanied by significant infusions of private capital. The deals would have to foster consolidation and be less costly than a government takeover.
The measure, sponsored by two Democratic senators, Terry Sanford of North Carolina and Christopher Dodd of Connecticut, was adopted late Thursday on a voice vote during deliberations on banking reform legislation.
Though the resolution was nonbinding, it signaled that legislators want more aggressive action by regulators to head off bank failures.
The House has not considered the early-assistance idea - which is similar to the controversial, infrequently used rescue technique known as open-bank assistance - and the Resolution Trust Corp. Oversight Board would have to allocate funds to prop up thrifts.
The idea is being promoted by T. Timothy Ryan Jr., director of the Office of Thrift Supervision, and Harrison Young, director of resolutions at the Federal Deposit Insurance Corp.
Regulators said they have authority for early resolutions but want approval from Congress before proceeding.
