It's Deja Vu All Over Again -- Truth-in-Savings Bill Is Back

On March 22, 1984, Rep. Richard Lehman, a Democrat from California, introduced the Truth-in-Savings bill. He introduced it again in 1986, when the next Congress was seated, and every two years thereafter.

The bill has proved popular; it regularly passes either the House or the Senate, and sometimes both. Unfortunately, it never passes both chambers in identical form -- a requirement for a bill to be signed into law.

As a result, introduction of Truth-in-Savings bills has become a regular opening rite for each new Congress.

"It's kind of a hapless bill," said Joseph Belew, president of the Consumer Bankers Association, one of the many groups that have opposed the bills over the years.

For better or worse, Rep. Lehman, who no longer sits on the House Banking Committee, is back with a new version of Truth-in-Savings. His bill, which was the subject of hearings last week, would set uniform standards for the disclosure and advertising of interest rates.

Although it would not mandate a uniform method of calculating interest, it would require that interest be calculated on the full amount of principal.

Bankers by and large applaud the goals of Truth-in-Savings but still find reasons to oppose it. Most bankers groan at the thought of complying with one more paperwork regulation.

Mr. Belew said the big problem is that the measure does not apply to the $1.2 trillion mutual fund industry, which competes heavily with banks for consumer dollars. Mutual funds, Mr. Belew said -- especially money-market mutual funds -- look strikingly similar to bank savings accounts.

The Senate has been willing to include mutual funds in its bill. But in the House, where mutual funds fall under the jurisdiction of the Energy and Commerce Committee, which regularly feuds with the banking panel over turf, covering mutual funds is almost out of the question.

Michelle Meier, a lobbyist for Consumers Union, says she thinks Truth-in-Savings has a shot this year, especially since Senate Banking Committee Chairman Donald W. Riegle has vowed to make it part of the Senate version of the banking reform package.

"But then I've thought that every year," she said.

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