WASHINGTON — The House approved a bill Wednesday that aims to ease the burden on banking agencies' inspectors general by significantly raising the trigger for an investigation of a failed bank.

Under current law, inspectors general must report on any failure estimated to cost at least $25 million to the Deposit Insurance Fund. The bill would raise that level to $200 million.

Supporters of the legislation said the stream of recent failures — there have been 64 so far this year, most costing more than $25 million — have made it hard for IGs to keep up. Lawmakers said requiring IGs to devote resources to investigating smaller failures is diverting them from overseeing other aspects of the housing crisis.

"We require that the inspectors general complete these reviews within six months" of a failure, said Rep. Steve Driehaus, D-Ohio, the bill's author, before it passed by voice vote. "Right now, given the [current] threshold, they simply don't have the ability to do that."

As of July 17 the Federal Deposit Insurance Corp.'s inspector general had completed nine material loss reviews this year, with 31 more in process. The Treasury Department's inspector general has issued six since November 2008 and has another 16 under way.

"Before 2007," the Treasury "office had not conducted a review of this nature in almost five years," said Rep. Christopher Lee, R-N.Y. "At the end of the day, when you have these auditors focused solely on bank failures, that's time taken away from other aspects of this economic crisis."

FDIC Inspector General Jon Rymer agreed there is a need for oversight of broader programs generated during the crisis, such as the FDIC's temporary liquidity guarantee and the Troubled Asset Relief Program. But the auditors are simply overtaxed with failed-bank reviews, he said. "It has come to the point where completing material-loss reviews is almost all that we've been able to do in terms of internal audit coverage and internal audit support for the FDIC over the last several months," Rymer said in an interview.

If the bill passes, failures that cost less than $200 million could still be investigated if circumstances warrant. The bill would require the inspectors general to determine whether certain failures not causing a material loss could merit a closer review.

The legislation includes "protections that will ensure proper oversight is conducted of any failed institution that costs even a dollar," Rep. Dennis Moore, D-Kan., said Wednesday.

The IGs have already teamed up to investigate the collapse of Washington Mutual, even though its September failure did not cost the DIF any money.

"In my view, every bank failure is a tragedy. We do have an obligation to take a look at those to make some determination as to what happened," Rymer said.

A Senate version of the bill has not yet been introduced.

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