WASHINGTON -- Lawmakers are poised to work on comprehensive bank overhaul legislation next week, delaying action on a measure to recapitalize the dwindling coffers of the Resolution Trust Corp.
"There's a good chance we'll be on the floor next week" with legislation that would allow banking companies to underwrite municipal revenue bonds and other securities, an aide to the House Banking Committee said.
"That is going to preoccupy the members, so there won't be any decisions on the RTC bill until that's out of the way," the aide said.
A Senate Banking Committee aide said that panel's version of the comprehensive reform legislation may hit the Senate floor next week as well, also pushing back any action on the Resolution Trust recapitalization measure.
The committee is holding hearings this week on Resolution Trust, but no date has been set for a vote on a recapitalization bill for the savings and loan cleanup agency. "We're going to do it," the Senate aide said. "It's just a question of when."
To date, only the House Banking Committee's financial institutions subcommittee has voted to provide Resolution Trust with the $80 billion the Bush administration says is needed by the end of the year to complete the task of closing the nation's insolvent thrifts.
But to the administration's chagrin, the panel voted to provide the agency with an immediate infusion of only $20 billion. The remaining $60 billion could be provided only if the Bush administration and Congress agreed on a way to cut spending and increase taxes to accommodate the thrift expenditures.
The pay-as-you-go plan, sponsored by Rep. Joseph P. Kennedy 2d, D-Mass., sharply divided the subcommittee and led all but one of the panel's Republicans to vote against the bill. It also drew a strong rebuke from the Bush administration. Deputy Treasury Secretary John E. Robson said, "This legislation would delay the savings and loan cleanup and raise the costs to the American taxpayer."
Though the Resolution Trust funding legislation is considered a "must" by most observers, lawmakers appear in no rush to complete the task. There are many reasons for this inertia, beginning with the fact that providing money to close dead thrifts while other domestic programs are capped or curtailed is politically unpalatable.
In addition, members of Congress have questioned the integrity of Resolution Trust's management. Rep. Frank Annunzio, D-Ill., said earlier this month that "a sizeable portion of the money that the administration is seeking in this legislation is not to pay off depositors, but rather it is to restock the liquor cabinets of the RTC, pay inflated salaries that are not available to most other government employees, and to generally rob the taxpayers."
Rep. Annunzio, the chairman of the banking panel's financial institutions subcommittee, said the agency held a three-day training conference at a cost of $84,960. Included in the tally was $758 for 42 bottles of wine. "To some, RTC stands for Resolution Trust Corp.," he said. "I think a better name would be Royal Treatment Corp."
"There's not a whole lot of pressure to provide more money to the gang that can't shoot straight," a committee aide said. To date, a total of $80 billion already has been provided the agency since it was established in 1989.
Another factor weighing against rapid action on Resolution Trust funding legislation is that the Bank Insurance Fund appears to need more immediate attention. Some observers believe the fund is about tapped out and requires recpitalization now.
The comprehensive banking legislation, which among other things would expand bank securities powers, also would provide the insurance fund with $30 billion.
Despite the uncertainties, most on Capitol Hill believe the Resolution Trust legislation ultimately will gain the attention of lawmarkers.
"Either the bill is dead on delivery, or it will live on its own demerits," a House Banking Committee aide said. "There's time to get this done before adjournment," which could come by Thanksgiving.