With the industry's backing, House Banking Committee Chairman Jim Leach has asked Republican leaders to schedule a floor vote on legislation capitalizing the thrift insurance fund.
In meeting with House Speaker Newt Gingrich and Majority Leader Dick Armey on Wednesday, Rep. Leach initially pushed for the measure to be brought to a vote today, but they rejected such quick action. The Iowa Republican is now shooting for a vote in early September.
The American Bankers Association, the Independent Bankers Association of America, and the thrift trade group America's Community Bankers endorsed Rep. Leach's effort because the package also contains regulatory relief for the industry.
"We told Chairman Leach we would work with him to have a package brought to the House floor. Our membership has indicated if we can get a workable package this year we ought to try and do it," said Edward L. Yingling, chief lobbyist for the ABA.
"We are supportive of anything that will stabilize the deposit insurance system and that capitalizes the Savings Association Insurance Fund," said Robert Davis, director of government relations for America's Community Bankers. Mr. Davis added that his group's support is contingent upon provisions requiring a merger of the bank and thrift funds and pro-rata sharing of Financing Corp. bond payments starting in 2000.
Meanwhile, lawmakers were rushing to pass several high-profile bills before they adjourn for August recess today.
One key bill expected to pass Congress today - increasing the minimum wage and providing tax breaks for small businesses - includes several important banking provisions.
Key among those provisions are plans to shield thrifts from $3 billion in taxes on bad debt reserves. The bad-debt "recapture" plan is an important element to shoring up the thrift fund and eventually merging the bank and thrift charters.
"It takes a straitjacket off of them and allows flexibility to change charters," said Richard F. Hohlt, an industry lobbyist.
The minimum wage bill contains several other banking provisions:
*Allows tax-free rollover of common trust assets into mutual funds.
*Creates "financial asset securitization investment trusts" for securitizing nonmortgage debt.
*Lets small financial institutions structure themselves as "Subchapter S" corporations and pass along income to stockholders without being taxed first.
*Increases individual retirement account contributions from nonworking spouses to $2,000 from $250.
"It's quite a nice tax package," said Donna Fisher, director of tax policy for the ABA. "The key thing is there are lots of things in this both for banks and bank customers."
Rep. Leach's proposal includes "Leach Lite," a scaled-down regulatory relief/financial modernization plan as well as the banking panel's July 25 compromise on the thrift fund fix.
The committee's new plan would leave thrifts with a $450 million annual bill through 1999 on Financing Corp. bonds used to bail out the industry in the late 1980s. Banks would be forced to pay roughly $320 million of the bonds' $780 million annual tab.
Banks would assume the bulk of the bond payments in 2000, based on the industry's share of insured domestic deposits.
Rep. Leach said he would not include committee-approved plans to make the Federal Reserve contribute roughly $100 million to the bond payments yearly from its surplus funds.
Rep. Leach also asked House leaders to block any attempt by Rules Committee Chairman Gerald Solomon to attach an amendment barring the Comptroller of Currency from granting new insurance powers to banks. Any prohibition on the comptroller would turn banks against the bill.