Action on Legislation
Sen. Alfonse M. D'Amato, R-N.Y. and Rep. Jack Fields, R-Tex.
Banks with mutual fund operations and securities brokerage affiliates will benefit from new uniform securities standards that replace a mishmash of federal and state laws.
Under the new law, passed by Congress Oct. 1, mutual funds are subject only to Securities and Exchange Commission registration requirements. Also, states cannot impose capital, margin, or other operational requirements that vary from SEC rules.
The legislation was sponsored by Senate Banking Committee Chairman Alfonse M. D'Amato, R-N.Y., Sen. Phil Gramm, R-Tex., and Rep. Jack Fields, R-Tex.
Rep. Jim Leach, R-Iowa
President Clinton Sept. 30 signed into law legislation to capitalize the Savings Association Insurance Fund.
Under the plan, thrifts must pay a one-time, $4.7 billion assessment to capitalize the fund. Banks will be required to begin paying interest on Financing Corp. bonds used to bail out the thrift industry in the late 1980s. Banks will pay $322 million a year toward the $780 million annual Fico tab beginning Jan. 1, 1997. The industry's share will climb to $608 million a year in 2000.
The legislation was crafted after 18 months of negotiations among industry trade groups and the banking committees, whose chairmen are Sen. D'Amato and Rep. Jim Leach, R-Iowa.
The thrift fund rescue was attached to a catchall spending bill. The legislation also contains other important banking provisions described below.
Sen. Richard Shelby, R-Ala.
Sen.Connie Mack, R-Fla.
Congress rolled back more than 30 paperwork and compliance laws in a regulatory relief package. Major provisions ease the Real Estate Settlement Procedures Act, Truth-in-Savings, Truth-in-Lending, and Home Mortgage Disclosure Act. One specific change will allow bank holding companies to acquire permissible nonbank operations without regulatory approval. Also, bank holding companies need only Fed approval to acquire a thrift and no longer need make a second application to the Office of Thrift Supervision.
The regulatory relief proposals were sponsored by Sens. Richard Shelby, R-Ala., and Connie Mack, R-Fla., and by Rep. Doug Bereuter, R-Neb.
Fair Credit Reporting
Sen. Richard Bryan, D-Nev.
Sen. Christopher Bond, R-Mo.
New credit reporting rules allow bank holding companies to share data among subsidiaries and let credit card companies and other lenders "prescreen" credit bureau data bases by demographic standards.
Also, banks and other businesses that supply credit information to bureaus must clean up incorrect records so bad data doesn't keep reappearing on a consumer's report.
The new rules were drafted by Sens. Richard Bryan, D-Nev., Christopher Bond, R-Mo., and Connie Mack, R-Fla.
CEBA Growth Cap
Rep. Mike Castle, R-Del.
Nearly 10 years after restricting the growth of nonbank banks, Congress lifted the 7% annual growth cap.
Growth at the 23 institutions known as "CEBA banks," or limited-purpose banks, was restricted by the Competitive Equality Banking Act.
Rep. Mike Castle, R-Del., originally proposed lifting the CEBA growth cap as part of the House Banking Committee's Glass-Steagall repeal bill. Sen. D'Amato sponsored a similar measure as part of his panel's regulatory relief package.
Sallie Mae Privatization
The Student Loan Marketing Association, known as Sallie Mae, will be privatized within 15 years. Stockholders of Sallie Mae have 18 months to accept a privatization plan designed by the company. If they do not agree, Sallie Mae will continue to operate as a government-sponsored enterprise until 2013, when it will be dissolved.