The House Banking Committee is expected to vote today on a new, bipartisan plan for rescuing the thrift insurance fund.
The legislation would leave banks with a big share of the cleanup's cost but would delay for two years the industry's full payments of interest due on Financing Corp., or Fico, bonds.
As do a variety of other rescue proposals, the bill would impose a one-time fee on thrift deposits to capitalize the Savings Association Insurance Fund. A merger of the bank and thrift insurance funds would occur in 1999 - if legislation merging the industries' charters has been enacted.
The bipartisan plan was expected to be offered as an amendment to a budget bill scheduled for a vote by the House Banking panel today. But Rep. Jim Leach, the committee chairman, late Wednesday scratched consideration of the larger budget legislation to focus on the thrift fund bailout.
The plan being offered by Reps. Marge Roukema, R-N.J., and Henry Gonzalez, D-Tex., among other lawmakers, is a substitute for Rep. Leach's latest proposal to require Fannie Mae and Freddie Mac to pay half the interest due on Fico bonds.
The government-sponsored enterprises have strongly opposed the Leach bill, as have many housing industry groups.
"It's more politically viable," Rep. Roukema said of the new proposal. Hitting up Fannie and Freddie added another layer of controversy that is delaying enactment of the rescue, she said.
Rep. Leach reportedly wants several changes to this bi-partisan substitute. But a spokesman said the Iowa Republican is willing to support the substitute if the committee approves it today.
The substitute legislation has a good chance of passing, with Republican backing that includes Reps. Bill McCollum of Florida, Edward Royce of California, Jerry Weller of Illinois, and Jon Fox of Pennsylvania.
Also on board are such Democrats as Reps. John LaFalce of New York, Bruce Vento of Minnesota, and Paul Kanjorski on Pennsylvania.
"I think it's a very constructive effort," said Treasury Under Secretary John D. Hawke Jr. "We still have not abandoned our basic proposal, but I think the key to this bill is getting the thrifts and the banks together.
One way to get the banking industry's support is adding regulatory relief to the bill. But Mr. Hawke insisted the Clinton administration will not accept a weakening of the Community Reinvestment Act to get the SAIF rescue enacted.
"Some people think we can be coerced," he said. "That is categorically wrong."
For now, the American Bankers Association continues to back Rep. Leach's proposal. The ABA is waiting to see what happens in today's committee vote before taking a position on any other proposal, chief lobbyist Edward Yingling said.
The Independent Bankers Association of America also is sticking with Rep. Leach, but will look "very, very seriously" at the substitute proposal, said executive vice president Kenneth Guenther.
Bankers have insisted the Fico bond payments are not their responsibility. But they are supporting the Leach proposal because it reduces the industry's cost by getting the GSEs to put up about half the $800 million annual bill.
For bankers, even the substitute to Mr. Leach's bill is better than the legislative fix Congress approved last year. That bill, which was vetoed for unrelated reasons, would have charged them $600 million in annual interest payments on the Fico bonds through 2017.
Under the substitute, banks would owe about $300 million of interest in 1997 and $372 million in 1998.
Thrifts now pay the entire $800 million owed annually on the bonds, issued in the late 1980s as part of the savings and loan bailout. But the savings association fund is shrinking as thrifts find ways to shift deposits to the Bank Insurance Fund and escape premiums that are 23 basis points higher.
If the thrift fund gets too small, premium payments would not cover the Fico interest bill, and that could cause a default.
