Thrift Trade Group Asks 'Clean' Fund Rescue
WASHINGTON - America's Community Bankers is warning lawmakers against burdening with unrelated issues the legislation to shore up the Savings Association Insurance Fund.
"ACB has long supported regulatory burden relief and financial modernization on their own merits," ACB president Paul A. Schosberg told congressional leaders in an Aug. 21 letter that was released Wednesday. "However, potentially controversial issues should not delay swift passage of BIF/SAIF legislation. Securing our deposit insurance system comes first."
The House Banking Committee approved a thrift fund rescue in July, and Chairman Jim Leach has said he will attach regulatory relief as well as new merchant banking and securities powers for banks. These sweeteners coaxed the banking industry into supporting the measure.
Mr. Schosberg also criticized the latest compromise, saying it is unfair to make thrifts pay the bulk of the interest due on Financing Corp. bonds for three more years. Under the deal, thrifts are to pay a one-time fee on deposits, totaling roughly $5 billion, in order to capitalize their insurance fund.
"It prolongs a deposit insurance premium disparity that SAIF-insured institutions rightfully believed would be eliminated if they put up the equivalent of a year's earnings to fully capitalize the insurance fund," he said.
The trade group's letter went to Senate Majority Leader Trent Lott, Senate Minority Leader Thomas A. Daschle, House Speaker Newt Gingrich, House Majority Leader Richard K. Armey, and House Minority Leader Richard A. Gephardt. - Olaf de Senerpont Domis OCC Adopts Uniform Flood Insurance Rule
WASHINGTON - The Office of the Comptroller of the Currency today will issue a revamped flood insurance rule that lets banks charge borrowers for determining whether properties lie in flood zones.
The OCC is the last of five agencies to adopt the joint rule, which takes effect Oct. 1 and enforces the National Flood Insurance Reform Act of 1994. The Federal Reserve, National Credit Union Administration, Federal Deposit Insurance Corp., and Office of Thrift Supervision had approved it earlier this summer.
The rule also authorizes banks to buy flood insurance for borrowers who allow their own policies to lapse. In addition, lenders are required to put flood insurance premiums in escrow if they have such an account for homeowner's insurance premiums or local property taxes.
The rule also requires bankers to notify borrowers whose properties are reclassified as lying within a flood zone. Finally, it permits lenders to exempt from the rule loans of less than $5,000 that have repayment cycles of less than one year.
The rule applies to any property in a community that has a greater than 1% chance of being flooded in a given year. - Jaret Seiberg Fed Amends Investment Adviser Regulation
WASHINGTON - The Federal Reserve this week adopted a final amendment to its interpretive rule governing investment adviser activities under Regulation Y.
Effective Sept. 30, a bank holding company and its subsidiaries may buy, in a fiduciary capacity, securities of an investment company they advise as long as the purchase is specifically authorized by terms of the instrument creating the fiduciary relationship, by court order, or by local law.
In its order Monday, the Fed said it had decided against requiring holding companies to give fiduciary customers written disclosures explaining that it or its subsidiary advises the investment company whose shares are being purchased. The Fed said such a requirement would duplicate other conflict of interest disclosures. - Barbara A. Rehm
