The Senate approved a one-year extension for the FHA reverse mortgage program. That program would be kept alive through 1996 as Congress debates the future of the Department of Housing and Urban Development, which runs the program.
The extension was sponsored by Senate Banking Committee Chairman Alfonse M. D'Amato who previously introduced S 1409, which would reauthorize the reverse mortgage initiative through 2000. The House has already passed a five-year reauthorization of the program.
Sen. D'Amato said the one-year stopgap funds are needed to protect housing programs while Congress decides their future. Reverse mortgages allow elderly homeowners to receive monthly payments based on the equity in their homes.
Legislation giving Farmer Mac new powers and more time to meet capital requirements passed Congress Jan. 26. President Clinton is expected to sign the bill soon.
The measure also allows banks to sell loans to Farmer Mac without creating a 10% reserve. Sponsored by Sen. Richard Lugar, R-Ind., and Rep. Bill Emerson, R-Mo., the measure would allow the agency to pool loans itself rather than through an outside firm. In addition, the measure would give the agency three more years to meet minimum capital standards.
Two influential House Banking Committee members asked Chairman Jim Leach to move regulatory relief legislation as a separate bill this spring, but the Iowa Republican rejected that deadline. At a meeting of committee Republicans Jan. 25, Reps. Richard Baker of Louisiana and Marge Roukema of New Jersey - both subcommittee chairmen - urged Rep. Leach to cut regulatory relief free from Glass-Steagall legislation if the logjam blocking the latter measure can't be broken soon.
Rep. Leach said he is willing to bring a separate regulatory relief bill to the House floor this year but doesn't want to commit himself to a time.
In December, Rep. Leach said he would try to bring his Glass- Steagall/regulatory relief legislation to the House floor without bankers' support if the industry couldn't strike a deal over insurance restrictions in the bill.
The Senate Banking Committee's regulatory relief bill could be approved by the Senate anytime.
The regulatory relief bill would streamline a number of laws, including Truth-in-Lending. However, most Community Reinvestment Act changes have been stripped from the bill. Though the bill is watered down from its original version, industry lobbyists say they are eager for approval.
Thrift Fund Rescue
House Speaker Newt Gingrich eyed the Savings Association Insurance Fund rescue as a way to pay for a $6 billion tax cut for families.
The thrift fund fix, along with a related measure to recapture thrift tax breaks, has been stalled in Congress by the fight over balancing the federal budget.
Banking sources said Rep. Gingrich may make another try at using the thrift bailout to fund the tax credit. Another opportunity may arise when Congress considers increasing the debt limit in late February.
The rescue would capitalize the insurance fund by charging thrifts a one-time fee of about 85 basis points. The bulk of annual interest due on thrift bailout bonds would be paid by banks.
The House passed a bill stripping Retirement CDs of federal deposit insurance. The lead sponsor, Rep. Marge Roukema, R-N.J., said the lifetime payout features of the CDs raised "serious safety and soundness concerns" for banks.
Retirement CDs, like annuities, offer tax-deferred accumulation and guaranteed lifetime payments after maturity. Similar legislation is pending in the Senate.