Action on Legislation
Bad Debt Recapture
The House passed legislation March 28 protecting thrifts from $3 billion of back taxes. The bill forgives taxes owed on bad-debt reserves built up before 1988, which thrifts would now have to pay if they convert to commercial banks.
The legislation, sponsored by House Ways and Means Committee Chairman Bill Archer, R-Tex., would force all thrifts to pay $1.5 billion of taxes for reserves taken since the beginning of 1988. Thrifts could defer payment for up to two years if they meet a residential lending test.
The plan was tacked on to a health insurance bill to offset the cost of tax exemptions for nonprofit insurers of high-risk people.
Reverse Mortgages
President Clinton signed legislation March 28 extending the government's reverse mortgage program until the year 2000. Under the program, people 62 and older can supplement their incomes by borrowing against the equity in their homes. The reverse mortgage program was included in a bill funding housing programs for senior citizens and disabled people. It was sponsored by Senate Banking Committee Chairman Alfonse M. D'Amato and Rep. Rick Lazio, both New York Republicans.
New Legislation
Federal Home Loan Bank Reorganization
House Banking's subcommittee on capital markets approved legislation March 28 to modernize the Federal Home Loan Bank System. The bill would make membership voluntary for all institutions, including thrifts. Sponsored by Rep. Richard H. Baker, R-La., the legislation also would drop residential lending requirements of the 12 newly named Enterprise Resource Banks and broaden their mission to include lending to rural or underserved areas.
Under the measure, members' combined annual interest obligation on Resolution Funding Corp. bonds - currently $300 million - would be fixed at 23.7% of system earnings.
Pending Legislation
Glass-Steagall/regulatory relief
Spurred by a Supreme Court decision, House Banking Committee Chairman Jim Leach said he wants his Glass-Steagall/regulatory relief bill to let banks and insurance companies own each other. Rep. Leach said the new insurance provisions may soften opposition to the legislation, which also would permanently bar the Comptroller of the Currency from expanding bank insurance powers.
Thrift Fund Rescue
Plans to capitalize the Savings Association Insurance Fund will again be swept up in budget politics when Congress returns Monday. Bank and thrift groups will resume lobbying to bring House Speaker Newt Gingrich and other congressional leaders to their side on plans to replenish the thrift insurance fund.
Congress must pass another government spending bill by April 24, giving supporters another chance to attach the thrift fund fix to "must-pass legislation."
Before lawmakers broke for their Easter recess March 29, thrifts and bank regulators had lobbied furiously to include the thrift fund plan on either a debt limit increase or a temporary spending bill.
But banks, angered that the plan would require them to assume a big chunk of payments on bonds used to bail out the thrift industry, won that round.
