WASHINGTON -- For the third time this year, the House Banking Committee yesterday approved legislation that would pump $30 billion into the moribund Bank Insurance Fund.
Previously, the insurnace fund recapitalization provisions had been attached to broader legislation, including a bill that would have allowed banks to get into the securities business.
But the House earlier this month trounced the legislation, prodding the committee to approve a narrower measure onfined largely to recapitalizing the insurance fund and implementing regulatory reforms.
The panel's 44-7 vote for the smaller bill was premised on the belief that members of the House would be more willing to swallow the needed legislation if it was not laden with other controversial provisions.
The insurance fund will go broke by the end of the year without added funds.
To date, lawmakers have provided $80 billion for the savings and loan cleanup, but until now they have not been called on to bolster the Bank Insurance Fund.
But the thrift bailout money has soured the atmosphere on Capitol Hill, making passage of the Bank Insurance Fund legislation far from certain.
A vote is expected on the House floor by the end of the week.
The legislation approved by the panel would allow the insurance fund to borrow up to $30 billion from the Treasury Department. The loan would be repaid through higher premium assessments on banks.
In other action yesterday, the banking panel voted to provide an additional $20 billion to the Resolution Trust Corp., which was established in 1989 to close insolvent thrifts and dispose of their assets.
The money would be raised through direct Treasury borrowing and, unlike the funds approved earlier in the day for bank insurance, would not be a loan.
The panel voted to allow another $60 billion to be used by Resolution Trust, but only if the President and Congress agree on how to raise the money without increasing the federal deficit.
The controversial pay-as-you-go provisions had been approved in September by the banking panel's financial institutions subcommittee, but were challenged yesterday by Rep. Chalmers Wylie, R-Ohio. Rep. Wylie's efforts to strip the bill of the pay-as-you-go language languished on a 27-25 vote.
However, Rep. wylie later scored a victory when the panel approved an amendment he offered that would prohibit tax increases to fund the remainder of the thrift bailout.
Consequently, the bill as it stands would require Congress and the President to come up with $60 billion of spending cuts to fund a continuation of thrift bailout efforts after the $20 billion provided by the bill is exhausted.
A final vote by the committee on the Resolution Trust funding bill is expected today, and the House is expected to take it up before the end of the week.