House Banking Committee Democrats are trying to weaken regulatory relief contained in a compromise plan to shore up the Savings Association Insurance Fund.

Led by Reps. Bruce Vento of Minnesota and John J. LaFalce of New York, the panel's Democrats hope to preserve a handful of consumer protection rules that Republicans want to dump.

The two Democrats have spearheaded talks with the banking panel's chairman, Rep. Jim Leach, R-Iowa, and his staff during the past month in hope of reaching a deal by the time Congress returns Sept. 3. Rep. Vento said Democrats now have leverage to make changes because Rep. Leach wants to pass the legislation before Congress adjourns in late September.

"Republicans have come off their ideological position and are trying to talk to us in a more pragmatic way after months of polarized action," Rep. Vento said.

Democrats do not want "well-managed and well-capitalized" institutions to be able to make acquisitions without regulatory approvals. This would pull the Community Reinvestment Act's teeth, they have argued.

"The only enforcement mechanism for CRA involves challenges by community groups of an institution's application for regulatory approval of new activities, acquisitions, and branches," Rep. LaFalce wrote in a letter to Rep. Leach last month.

Rep. LaFalce suggested that automatic approval be allowed only to institutions with a "high standard of CRA performance." Rep. Vento, however, said the public must be allowed to comment on all acquisitions. He proposed a 30-day comment period as part of the streamlined acquisition rules.

The panel's Democrats also oppose a provision that would let the Federal Reserve exempt any type of loan from the Truth-in-Lending Act if compliance does not give "measurable benefits to consumers."

They have also lined up against a proposal to exempt more institutions from Home Mortgage Disclosure Act compliance. The proposal would exempt the 4,063 institutions that have less than $50 million of assets from HMDA reporting. Currently, only 600 institutions, with assets of less than $10 million, are exempt.

A spokesman for Rep. Leach said the committee chairman is trying to agree on 80% of the issues raised by Democrats without jeopardizing industry support for the bill.

The regulatory relief package is crucial to industry support for the thrift insurance fund rescue. If industry regulations aren't cut back as a reward, the American Bankers Association will renew its opposition to a plan that would make banks pay part of the interest on Financing Corp. bonds used to bail out the thrift industry in the late 1980s.

"Banks are paying a steep Fico bill," said Charlotte Birch, a spokeswoman for the ABA. "If the regulatory relief portion is watered down any further, that could make the whole package unacceptable."

Other regulatory relief proposals the Democrats oppose include:

*Eliminating duplicative disclosure requirements for the Real Estate Settlement Procedures Act and Truth-in-Lending Act.

*Repealing civil penalties for violating disclosure requirements under Truth-in-Savings.

*Limiting civil liability on a variety of leasing disclosures, including descriptions of leased vehicles, fees paid by consumers, and termination penalties.

*Transferring most rulemaking and enforcement authority for Respa from the Department of Housing and Urban Development to the Federal Reserve Board.

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