Action on Legislation
Interest on business checking The House on April 11 approved legislation introduced by Banking Committee Chairman Jim Leach and Rep. Jack Metcalf, R-Wash., that would let banks pay interest on business checking accounts three years after enactment.To appease bankers who oppose these payments, the implementation date was set two years later than in an earlier proposal, and sweep accounts would be expanded in the interim. The bill would increase withdrawals that corporate customers may make each month from sweep, or money market deposit, accounts to 24 from six.
The House Banking Committee approved the bill March 29.
Bankruptcy reform
House and Senate Republican leaders are working behind the scenes to jump-start the stalled bankruptcy reform bill.The House on March 9 approved legislation that would raise the minimum wage and cut business taxes. The bill was supposed to help lawmakers sever these controversial issues from bankruptcy legislation and debate them separately. But the Senate has been unable to broker a deal to break off these unrelated provisions. As a result, no conferees have been named.
House Speaker J. Dennis Hastert has reportedly tapped five Judiciary Committee members led by Chairman Henry J. Hyde to serve as unofficial negotiators with the Senate Judiciary Committee. If they can reach a compromise, Senate Majority Leader Trent Lott might attach it to unrelated legislation already in a House-Senate conference committee. It is unclear whether Democrats would support this.
Otherwise, little progress has been made since the Senate approved bankruptcy reform legislation Feb. 2 on an 83-to-14 vote.
The White House has said that amendments had made the bill more consumer-friendly, but that the President opposes a minimum-wage hike in the Senate bill as insufficient and objects to some tax-cut provisions. The administration previously threatened to veto the House bill and has said any compromise must preserve the Senate bill's consumer-protection items.
The Senate bill, introduced by Sen. Charles E. Grassley, would let bankruptcy judges force debtors who could afford to pay $15,000 or 25% of unsecured credit over five years to file under Chapter 13 of the bankruptcy code. A debtor might appeal on the basis of "special circumstances." Creditors could also ask judges to force debtors into Chapter 13 reorganization rather than eliminate their debts in Chapter 7.
In May 1999, on a vote of 313 to 108, the House passed a stricter version, introduced by Rep. George W. Gekas, R-Pa. It would force into Chapter 13 debtors who can pay $6,000 or 25% of unsecured credit over five years. Appeals could be based on "extraordinary circumstances."
Elecronic Signatures
The prospects for digital signature legislation improved March 29 when the Senate chose 17 negotiators to seek a compromise with the House.Commerce Committee members make up a majority of the Senate team. They are led by Chairman John McCain of Arizona, ranking Democrat Ernest F. Hollings of South Carolina, and the bill's sponsor, Spencer Abraham, R-Mich. Three Banking Committee members were named, too: Chairman Phil Gramm of Texas, ranking Democrat Paul S. Sarbanes of Maryland, and Sen. Robert Bennett, R-Utah.
The five-member House negotiating team is led by Commerce Committee Chairman Thomas J. Bliley Jr.
The Senate approved legislation on Nov. 19. The House on Nov. 9 voted 356 to 66 for a similar bill. But unlike the Senate bill, it also would permit financial services companies to make mortgage and other disclosures required by consumer-protection laws electronically instead of on paper.
The Clinton administration opposes the House bill - which is favored by the financial services industry - as anti-consumer. Instead it endorsed a scaled-down Senate bill offered by Sen. Spencer Abraham. The House adopted an amendment that would require that the consent request for electronic disclosures and records be "conspicuous and visually separate," so customers know what they are signing. And customers would be able to review, retain, and print records. Clinton administration officials have signaled recently that with a few more changes, an acceptable compromise could be reached.
Sens. Gramm and Abraham have reportedly drafted an alternative similar to the House bill, but Democrats are expected to push for more consumer protections.
New Legislation
Sen. Paul S. Sarbanes and Rep. John J. LaFalce, the ranking Democrats on their respective Banking Committees, introduced legislation April 12 to curb predatory lending practices.The bill would extend federal protections to more borrowers by lowering the standards for what constitutes a high-cost loan, expand the list of lending practices considered abusive, and toughen penalties. Disclosure requirements and other restrictions would be imposed on mortgages that have annual interest rates exceeding the yield on Treasury securities by 6 percentage points or total fees and points exceeding 5% of the loan amount.
Lenders making high-cost loans would have to comply with tougher standards for assessing borrowers' ability to pay, face tighter limits on prepayment penalties and fees, and be barred from using balloon payments among other restrictions.
Sen. Charles E. Schumer, D-N.Y., introduced a tougher bill Wednesday that would ban prepayment penalties and the financing of points and fees.
