Rep. Bill Archer R-Tex. Thrifts with bad-debt reserves would be protected from $3 billion in back taxes by legislation the House Ways and Means Committee approved last week. HR2494 would suspend "recapture" of tax breaks that thrifts received for their bad-debt reserves if Congress forces thrifts to convert to commercial banks. Under the bill, reserves taken prior to 1988 would be exempt from taxes. Reserves taken in 1988 or later would exempt only if the thrift met an annual residential-loan test. The bill is considered a crucial component of separate legislation to replenish the thrift insurance fund. Rep. Archer said he plans to attach this bill to the thrift fund fix currently being negotiated by the House and Senate banking committees. The Senate's budget-reconciliation package contains a "sense of the Senate" resolution awarding bad debt breaks almost identical to the House bill. Crediting payments by postmark date Bank trade groups mobilized last month against legislation that would require creditors to consider a bill paid on the date it was mailed. In letters to Rep. John McHugh, R-N.Y., the measure's sponsor, the American Bankers Association and the Independent Bankers Association of America argued that the Postmark Prompt Payment Act of 1995 would cost lenders a fortune. HR1963 would force payment processors to replace high-speed processing equipment in order to read various-sized envelopes and capture the postmarks, the groups argued. Banking groups are expected to testify at a hearing on the bill early next year. ACTION ON LEGISLATION Thrift fund rescue Sen. Alfonse M. D'Amato R-N.Y. The chairmen of the House and Senate banking committees agreed last week to rescue the Savings Association Insurance Fund, and pledged to deal by April with more complicated issues such as merging the bank and thrift industries. House Banking Chairman Jim Leach made his support for the narrow financial fix contingent upon a commitment by his Senate counterpart, Alfonse M. D'Amato, to move quickly on separate legislation to convert thrifts into commercial banks. Their compromise, part of a larger budget bill, would capitalize the insurance fund with a one-time charge on thrifts of about 85 basis points. The bulk of annual interest due on thrift bailout bonds would be paid by banks. Regulatory relief/Glass-Steagall Rep. Jim Leach R-Iowa House Banking Chairman Jim Leach said he remains determined to bring his legislation combining Glass-Steagall repeal and regulatory reform to the House floor before yearend, despite opposition from much of the banking industry. Bankers are angry because the bill would limit their insurance powers through a five-year freeze on the Office of the Comptroller of the Currency. Rep. Leach said he hopes to remove the insurance restrictions from the package and attach it to an as yet unidentified piece of legislation. The reg-relief bill would streamline a number of laws, including Truth- in-Lending. However, most Community Reinvestment Act changes have been stripped from the bill. The Senate Banking Committee is not preparing a Glass-Steagall package, but has approved a regulatory relief bill. As in the House Banking bill, Sen. D'Amato, in an effort to avoid a presidential veto, removed a provision that would exempt small banks from the CRA. Student Loans Rep. William Goodling R-Pa. House and Senate lawmakers compromised this week by limiting the government's share of the student loan market to 10%. GOP leaders had settled on the 10% cap earlier this month, directing negotiators from each chamber to include it in broader budget legislation being hammered out this week. Killing the program has been a priority for Rep. William F. Goodling, R- Pa., chairman of the House Economic and Educational Opportunities Committee. However, he consented to give the government 10% of the market as part of a larger deal. The bill would also increase fees on financial institutions that make student loans. Lenders would be forced to absorb 5% of the loss on unpaid loans; banks' losses are now capped at 2%. The measure also would double, to 100 basis points, origination fees lenders must pay. Individual retirement accounts Sen. William V. Roth R-Del. House and Senate negotiators are hammering out differences between individual retirement account provisions contained in each chamber's budget bill. Both versions would create a "back-loaded" IRA, in which contributions would be nondeductible but interest earned could be withdrawn tax-free after five years. These withdrawals would be permitted for first-time home purchases, college tuition, and major medical expenses. Unlike its House companion, the Senate version would increase the number of people eligible for current IRAs, for which contributions are deductible. Under the measure, which was sponsored by Sen. William V. Roth, R-Del., single people earning $85,000 a year and couples making up to $100,000 would be able to deposit up to $2,000 tax-free in an IRA. Lender liability Sen. Robert C. Smith R-N.H. Rep. Michael G. Oxley

R-Ohio Legislation clarifying the extent of a lender's liability for cleanup of hazardous chemicals hit snags in both chambers of Congress the last month. The House Commerce subcommittee on hazardous materials is considering the measure, which is tucked into a broader bill, HR2500, that aims to reform Superfund. However, panel Democrats are delaying completion of the vote for reasons unrelated to lender liability. The House Superfund bill was introduced by Rep. Michael G. Oxley, R-Ohio. A companion measure, S1285, hit a roadblock when its sponsor, Sen. Robert C. Smith, R-N.H., canceled an Oct. 12 hearing on the bill due to conflicts among Senate Republicans. Since both bills are being held up by provisions that have nothing to do with lender liability, banking lobbyists said they can do little but sit back and hope that lawmakers work out their differences. House and Senate regulatory relief measures contain lender liability provisions as well. SBA Loans Sen. Christopher S. Bond R-Mo. President Clinton signed legislation Oct. 12 rescuing the Small Business Administration's loan guarantee program, which was running out of money. The legislation reduces the level of loan-guarantee protection offered to lenders. The government will guarantee 75% of loans over $100,000 and 80% of smaller loans. The measure also increases the SBA fees lenders pay and replaces the current borrower's fee of 2% on the guaranteed portion of most loans with a sliding scale of one-time fees.

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