WASHINGTON - The banking industry's regulatory relief agenda advanced this week as House and Senate negotiators agreed on legislation permitting forbearance in disaster areas.

The measure would permit regulators to suspend appraisal requirements, truth-in-lending disclosures, expedited funds availability regulations, and other rules that might be difficult to comply with or that might impede lending in affected areas.

Appraisals, for example, could be meaningless in areas where few homes are left standing.

Regulators would also be able to calculate capital requirements without counting new assets attributable to payments from insurance companies or government agencies. Such payments could swell bank balance sheets and reduce capital ratios as a result.

Quick Approval Predicted

The bill is expected to receive quick approval in both the House and Senate.

The measure is a scaled-back version of a bill President Bush proposed following hurricanes Andrew and Iniki. Senate Democrats objected at first, saying it would have permitted regulators to suspend any regulation anywhere, even in areas unaffected by a natural disaster.

After subsequent talks between the House and Senate banking committees, the bill specified the regulations it covers and limited waivers to three years.

Despite the narrow scope of the legislation, the compromise was greeted warmly by banking lobbyists.

"Any bill that recognizes that there is a regulatory burden and cuts back on it is very much welcome," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America.

By making the point that an easing of regulations can help revive a damaged economy, the bill could help the industry make the case for broader regulatory relief in the next Congress, Mr. Guenther said.

In a related development, a number of other regulatory-relief items were scheduled to be considered late Wednesday in House-Senate talks on a housing authorization bill.

Among the items expected to be considered were industry-favored amendments dealing with appraisal rules and executive compensation guidelines. A measure giving thrifts more time to phase out their investment in real estate subsidiaries was also scheduled for consideration.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.