Legislative Update

Action on Legislation

SBA Appropriation

The House passed a bill Sept. 5 eliminating federal money for the Small Business Administration's "504" loan program. This program would be funded through fees paid by lenders and borrowers.

The bill, sponsored by Small Business Committee Chairman Jan Meyers, also:

*Increases to 15%, from 10%, the minimum down payment for 504 loans, which are used for fixed-asset purchases.

*Directs the SBA to study how to improve its loan programs.

*Allows banks to securitize up to 10% of the amount of a "7a" loan. The 7a loan guarantee program is SBA's largest.

The Senate is expected to take up the bill before Congress adjourns Sept. 28.

Lawmakers must also pass an SBA appropriations bill. Expected cuts in federal guarantees would shrink 7a loan volume from $10.8 billion in fiscal 1996 to less than $8.5 billion in fiscal 1997. The House has passed its version of the spending bill, but the Senate has not completed its draft.

Pending Legislation

Thrift Fund Rescue/Regulatory Relief

The race is on to craft a compromise on legislation capitalizing the Savings Association Insurance Fund before Congress adjourns Sept. 28.

In July, industry trade groups agreed to a House Banking Committee plan to make thrifts pay a greater share of interest due on Financing Corp. bonds than banks until 1999.

Senate Banking Committee Chairman Alfonse M. D'Amato has not indicated whether he will go along.

Sen. D'Amato and Rep. Jim Leach are holding separate negotiations with bank trade groups and Democrats to reach an agreement on a regulatory relief package acceptable to both sides.

Insurance industry trade groups are also pressing Rep. Leach to include new restrictions on national banks' ability to sell insurance and the "retirement CD."

Securities Reform

Lawmakers from both chambers are working to settle differences on securities reform legislation, which would free bank holding companies from overlapping state and federal securities laws.

The House-passed bill, sponsored by Rep. Jack Fields, R-Tex., also would exempt broker-dealers from most state reporting requirements and would loosen restrictions on lenders that extend credit for customers' securities purchases. A companion bill passed by the Senate would exempt mutual funds from state registration rules.

ATM Fees

Legislation requiring ATM operators to disclose all surcharges appears dead for 1996. House Banking's financial institutions subcommittee approved a bill July 31 that would have required notices to be posted on the machines and on video screens. The panel, led by Chairwoman Marge Roukema, R-N.J., dropped a provision requiring banks to report information about their surcharges to regulators.

Business Checking Accounts

A hearing planned Wednesday on legislation that would let banks pay interest on business checking accounts was canceled. Rep. Jack Metcalf, R-Wash., introduced the bill Aug. 2.

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