New Legislation

Private Mortgage Insurance

Lenders would be required to tell homeowners when they no longer need mortgage insurance under legislation introduced Feb. 13 by Senate Banking Committee Chairman Alfonse M. D'Amato, R-N.Y.

The bill would require lenders to tell borrowers that they may cancel their mortgage insurance without penalty when equity in their home reaches 20% of the mortgage amount.

Rep. James V. Hansen, R-Utah, has introduced an identical measure in the House. Pending Legislation

Financial Modernization

The Clinton administration late this month is expected to recommend that lawmakers eliminate the barriers between banks and nonfinancial companies. The White House proposals are to be included in a Treasury Department study of financial reform.

Lawmakers already have introduced three financial modernization proposals.

Sen. D'Amato and Rep. Richard Baker on Feb. 11 introduced identical bills that would remove all barriers preventing banks from affiliating with other types of companies.

Proposals from House Banking Committee Chairman Jim Leach and Rep. Marge Roukema, introduced Jan. 7, don't go as far. Rep. Leach's bill would let bank subsidiaries enter many new businesses directly but would forbid any mixing of banking and commerce. Rep. Roukema's would let banking companies earn up to 25% of their revenue from nonfinancial business lines. Both proposals call for merging the bank and thrift charters.

Credit Unions

Credit union lobbyists said they expect lawmakers to introduce legislation expanding access to the nonprofit financial institutions soon.

However, big-name lawmakers appear reluctant to sign on since the Supreme Court's Feb. 25 decision to hear a case challenging whether federal credit unions may enroll employees from more than one company.

Rep. Martin Frost, D-Tex., has introduced legislation that would let credit unions stretch beyond their original membership group to serve low- income areas.

Individual Retirement Accounts

Key lawmakers have offered Individual Retirement Account proposals that would allow penalty-free withdrawals for specific purposes such as education expenses or first-time home purchases.

Senate Finance Committee Chairman William Roth, who introduced his Super IRA bill Jan. 22, is expected to lead the debate.

An identical measure was introduced in the House by Reps. Bill Thomas, R-Calif., and Richard Neal, D-Mass.

Their plan would: eliminate income limits for tax-deductible contributions, permit IRA contributions by 401(k) participants, and allow homemakers to contribute to an IRA, regardless of whether their spouses participate in employer pension plans.

ATM Fees

Rep. Bernard Sanders, I-Vt., introduced legislation Feb. 13 to prohibit banks from charging noncustomers who use their automated teller machines. Similar legislation is expected from Sen. D'Amato.

Banks would be forced to post surcharge fees on ATM screens and give customers the option of canceling a transaction under a bill introduced by Rep. Roukema.

Federal Home Loan banks

Rep. Baker revived his effort to reform the Federal Home Loan Bank System, in a bill introduced Jan. 7.

His legislation would let the 12 Federal Home Loan banks make advances for community and economic development lending.

Co-sponsored by Rep. Paul Kanjorski, D-Pa., the bill also would make membership in the system voluntary, even for thrifts, and would eliminate the cap on advances to commercial banks.

Narrower legislation is expected from Sen. Lauch Faircloth, R-N.C.

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