NEW LEGISLATION
Thrift fund rescue
The House and Senate are expected to begin serious work on legislation to rebuild the undercapitalized Savings Association Insurance Fund.
The House Banking Committee appears to favor a comprehensive approach while the Senate Banking Committee is focusing on a narrow financial fix.
Next week, a bipartisan plan in the House may be introduced by Rep. Bill McCollum, R-Fla., and Rep. Bruce Vento, D-Minn., that would capitalize the insurance fund with a one-time charge on thrifts of about 85 basis points; the annual interest due on thrift bailout bonds would be spread to banks; the thrift and bank insurance funds would be merged and a single charter would be created.
Bankers will probably not see any of the thrift industry's special powers transferred to the new single charter. Existing forms of thrift ownership are expected to be protected under the measure.
In the Senate, Banking Committee Chairman Alfonse M. D'Amato, R-N.Y., is backing a one-time fee on thrifts, sharing the Financing Corp. bond payments, and a merger of the funds.
Regulatory relief
The industry's top legislative priority was approved by the House Banking Committee in June, but stalled after insurance agents opposed an amendment that would allow banks and insurance companies to affiliate in most states.
Negotiations heated up in the House this week and House Banking Committee Chairman Jim Leach, R-Iowa, is meeting with House Speaker Newt Gingrich on the bill today.
Rep. Leach and Rules Committee Chairman Gerald Solomon hatched a deal that would drop the amendment permitting the affiliations among banks and insurance companies and freeze the Comptroller of the Currency's authority to expand national bank insurance powers for five years.
The reg relief bill would streamline a number of laws from the Community Reinvestment Act to Truth-in-Lending.
The Senate Banking Committee is expected to take up a companion bill, S 650, this month. Sen. D'Amato, in an effort to avoid a presidential veto, is thinking of removing a provision from the Senate bill that would exempt small banks from the CRA. A new rating - "high satisfactory" - could be added.
UPDATE ON PENDING LEGISLATION
SBA Loans
On Sept. 13, the House approved a bill that would rescue the Small Business Administration's loan guarantee program, which is running out of money.
The bill will push more risk onto banks by reducing the government's guarantee to 80% of the value of any loan up to $100,000 and 75% of any loan more than $100,000.
Current loan guarantee levels are 90% for loans up to $155,000. Larger loans, for as much as $750,000, are guaranteed up to 85% for loan periods of 10 years or less, and 75% if the term exceeds 10 years.
HR 2150 also would replace the current fee of 2% on the guaranteed portion of most loans with a sliding scale of one-time fees on borrowers over the entire loan amount.
While bank lobbyists applauded passage of the bill in the face of costlier administration proposals, they are hoping that the conference report will look more like the Senate version.
That bill, which the Senate approved last month, would be less costly to lenders because it contains a sliding scale of one-time fees that covers only the guaranteed portion of the loans.
Student loan audits
Banks that make student loans scored a victory last month when the House approved a measure that would drop the audit requirement for banks with student loan portfolios of $5 million or less.
The bill, which was tucked into a larger appropriations measure, was introduced by Rep. Thomas Ewing, R-Ill., and Rep. Ron Lewis, R-Kan.
Under a 1992 law, banks must hire independent auditors by Sept. 30 to review their compliance with the Department of Education's student lending rules.
PENDING LEGISLATION
Credit unions
The Senate Banking Committee in June approved S 883, a bill that would increase the federal government's power over state-chartered credit unions.
The Credit Union Reform and Enhancement Act would limit the lending and investment powers of federally insured state-chartered credit unions, as well as allowing the National Credit Union Administration to tighten oversight of corporate credit unions.
Individual retirement accounts
A budget agreement reached by House and Senate GOP leaders in June aims to expand individual retirement accounts. Though congressional tax committees will have to hammer out exactly what sort of IRA expansion will be included in the budget, lawmakers are expected to include a tax-free account for nonworking spouses.
Banks would benefit from expanded IRAs, which represent long-term core deposits.
Sen. William V. Roth, R-Del., and Sen. John Breaux, D-La., cosponsored a measure earlier in this Congress that would make IRA contributions fully deductible.
