WASHINGTON -- The House and Senate banking committees continued to make slow progress Tuesday on the Clinton administration's community development financial institutions bill, according to House and Senate banking committee aides.

Although significant hurdles remain, enough progress has been made to make it possible for lawmakers to meet on the legislation soon after Congress returns next week from the Independence Day recess, aides said.

The long-delayed "members' meeting" would likely clear the way for final action. However, a members' meeting has been expected for months now, and aides cautioned that the legislative negotiations could continue to drag out through the summer.

Bank Enterprise Act

A major issue in the bill involves funding for the Bank Enterprise Act, a 1991 law that would give banks rebates on their deposit insurance if they make loans in low-income neighborhoods. Though on the books, the law has never been funded.

Rep. Floyd Flake, D-N.Y., one of the original sponsors of the Bank Enterprise Act, proposed this year that half the $382 million in the community development bank bill be diverted to fund the enterprise act.

Later, in an effort to compromise with the Clinton administration, he dropped the funding level to a third of the community development funds. Despite vigorous opposition from the administration, Rep. Flake won handily when the banking committee voted.

Diversion Proposed

At Tuesday's meeting, staff representing Senate conferees proposed diverting half the funds for the Bank Enterprise Act to a "set-aside" for the administration's community development plan.

In effect, that would mean Rep. Flake's measure would end up with a sixth of the bill's funding.

The House conferees rejected the Senate plan. The two sides were tentatively scheduled to meet again late Tuesday, and some House aides expressed optimism that staff work on that provision could be wrapped up this week.

The major issue, however, continues to be treatment of foreign banks.

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.