WASHINGTON - The House of Representative has approved $1 million for a new program to reduce deposit insurance premiums for banks that invest in low-income communities.

The amount is far short of the $60 million sought by Rep. Tom Ridge, R-Pa., sponsor of the so-called "green-lining" proposal. But the initial spending will enable the government to write regulations and "flesh out the concept," said an aide to Rep. Ridge.

His Bank Enterprise Act was approved by Congress in last year's banking bill, but was not funded.

In contrast to the Community Reinvestment Act, which penalizes banks that fail to invest in low-income neighborhoods, Rep. Ridge's plan rewards those that make such investments.

"It's the first time Congress has ever acknowledged that these programs cost banks money," said Barbara Munson of the Consumer Bankers Association. And it means "Congress thinks the program is worth pursuing," she said

The enterprise act offers:

* A 50% reduction in insurance premiums covering "lifeline accounts" offered to low-income and student depositors.

* A one-time, 5% premium reduction for new loans or deposits in distressed communities.

* A one-time 15% credit for community development corporations or banks that invest in them.

Critics say the plan could serve as a subsidy for larger banks. They also worry about using the Bank Insurance Fund for a social program.

Ms. Cummins writes for the Medill News Service.

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