WASHINGTON - Delighting banking industry officials, Congress on Thursday passed compromise legislation that would provide $15 billion for farm aid now and higher crop insurance subsidies over the next five years.
The House adopted the bill on a voice vote before noon, a day after reaching a deal with Senate negotiators to reconcile differing versions of the popular legislation. The Senate approved the compromise bill late Thursday afternoon, 91 to 4, and President Clinton is expected to sign it soon.
Under the legislation, farmers would get $8.2 billion of increased subsidies through 2005 to reduce their crop insurance costs. Subsidies were significantly raised for farmers who buy higher levels of crop insurance. For instance, farmers who insure 85% of their harvest currently get a 13% premium subsidy, but the bill would nearly triple that, to 38%.
The balance of the package, $7.1 billion, would go toward aid for farmers who have suffered from bad weather and low prices worldwide. Of that, farmers would get $5.5 billion before the fiscal year ends Sept. 30.
Between that bill and the 237-to-197 House vote Wednesday to normalize trade relations with China, banking industry officials said agricultural interests - and thus the many banks who depend on loans to that sector - won significant victories this week.
"For the 7,000 banks trying to make these loans work, both these bills help," said John M. Blanchfield, director of the American Bankers Association's Center for Agricultural and Rural Banking.
Officials said bankers would benefit because Congress normally does not grant emergency aid until late in the year, making financial projections difficult. Also, over the longer term, more crop insurance for farmers means less risk of default in bad crop years.
"[Bankers] know the [agricultural] producers are going to have a certain amount of income coming in to pay the loans," said Mark Scanlan, director of agricultural finance for the Independent Community Bankers of America. "They can do a little better planning with the producers this way."
However, financial industry lobbyists had less to celebrate on two other priorities: bankruptcy reform and digital signature legislation. Both have stalled because of partisan disputes.
House and Senate Republican leaders were rebuffed by Democrats in their attempts late Wednesday to attach bankruptcy reform to the fast-moving crop insurance bill. Republicans were apparently fearful that President Clinton would veto the popular crop insurance bill if that happened, lobbyists said.
As a result, behind-the-scenes negotiations over controversial bankruptcy legislation are expected to carry over into June. Lawmakers are battling over several provisions, including homestead exemptions to protect debtors' houses from creditors. Also, Senate Banking Committee Chairman Phil Gramm has been pushing to exempt small financial institutions from some credit card-related provisions. Under his latest proposal, financial institutions with less than $250 million of assets would not have to provide until two years after enactment a toll-free number for consumers to call to find out how long it would take to pay off their balances with the minimum monthly payment. The Federal Reserve Board would provide that service for small bank customers in the interim.
Though lawmakers have insisted all week that they have resolved most of the disputes involving bankruptcy reform, lobbyists have complained that the details are sketchy and not in writing.
On digital signatures, Republicans and Democrats are tied up in the technical details of how far companies must go to assure that consumers who receive mortgage and other mandatory disclosures electronically, instead of on paper, have the hardware and software to read them.
Also on Thursday, the House Ways and Means Committee approved a bill that would phase out estate and gift taxes over 10 years - another high priority for small banks.
The Death Tax Elimination Act was adopted 24 to 11. The House has scheduled a vote on the bill for the week of June 5.
Kevin Guerrero contributed to this article.
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