WASHINGTON - President Bush signed legislation Thursday that rolls back some regulations that the banking industry had strongly opposed.
The action, which was expected, gave bank lobbyists the first victory in their battle against "regulatory burden," which has become an industry rallying cry.
The legislation, part of a housing authorization bill, softens a law passed last year that requires regulators to establish guidelines for executive compensation at banks.
Realty Deductions Delayed
The measure also delays the implementation of a 1989 law that requires thrifts to deduct from capital their investment in real estate subsidiaries.
There's some muscle in the measure as well. The law gives regulators authority to revoke the charters of institutions involved in money laundering.
Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America, hailed the measure, calling it "a prelude" to what the industry can expect to gain in the next two years.
No matter who is elected, he said, regulatory relief is likely to receive a high priority in the White House.
"We know where President Bush stands - he'll come back very strong," Mr. Guenther said. "And Gov. Clinton has made it very clear that regulatory overkill leads to economic problems and will be addressed in his jobs bill on the first day."
The IBAA's No. 1 target: reducing "the overwhelming paperwork associated with the Community Reinvestment Act.
The American Bankers Association has also made regulatory rollbacks its top priority. William H. Brandon, president of the group, noted that the nation's banks spent $10.7 billion on regulatory compliance in 1991, according to an ABA survey.
"We are all mindful of the need for strong bank regulation, but something's wrong when those regulations cost 60% of the industry's total profits," said Mr. Brandon, the president of First National Bank in Helena, Ark.
Other Key Points
Also included in the bill are measures affecting:
* Appraisal requirements. The bill affirms the right of regulators to set minimum levels for mortgage loans requiring appraisals by licensed professional.
The 1989 thrift bailout law requires the use of certified appraisers, but lenders and appraisers have disagreed about whether regulators could exempt mortgages of less than $100,000.
* Truth-in-savings. The effective date of the 1991 law requiring uniform disclosure of rates and terms of savings accounts is delayed for three months, until June 21, 1993, giving bankers time they say is badly needed to come into compliance.
In addition, advertising signs in the lobbies of banks and thrifts are exempted from the act's disclosure requirements.
* Insider loans. The Federal Reserve is given the authority to exempt from insider lending limits loans to officers and directors that pose minimal risk.
* Settlement costs. The law exempts lenders from having to provide estimates of settlement costs under the Real Estate Settlement Procedures Act if the lender rejects the loan within three days.
Wide Impact
The amendments delaying the phaseout of thrift investment in real estate subsidiares could affect as many as 100 savings loans around the country, said Patrick Forte, president of the Association of Financial Services Holding Companies. It will also help depressed real estate markets, he said.
"To drop their investment further in depressed markets would be damaging," Mr. Forte said. Thrifts have so far deducted from capital 25% of their investment in real estate units. An additional 15% was to have been deducted this year.
Now thrifts won't have to take another hit until July 1, 1994. After that, they would be required to deduct an additional 20% in 1995 and the remainder in 1996.
The money-laundering section of the bill provides new penalties against financial institutions and executives convicted of violating money-laundering laws, including the authority to place institutions in conservatorship or revoke their deposit insurance.
But it also creates a "safe harbor" to protect financial institutions that provide information to law enforcement authorities about their customers as they are required to do under the law.
