Action on Legislation Financial Modernization

The House planned to vote May 13 on legislation that would overhaul the financial services industry and allow mergers among banking, securities, and insurance firms.

The Rules Committee approved the bill May 12 and agreed to allow separate votes on amendments on operating subsidiary powers and bank entry into commercial businesses.

Banking trade groups urged lawmakers to vote against the bill because it would weaken the national bank charter and add burdensome regulation. The insurance and securities industries support the bill. Bankruptcy

The House is expected to pass an amendment backed by Republican leaders and Rep. John D. Dingell, D-Mich., that features a series of consumer protection provisions. It would restrict the ability of banks to collect brokerage commissions and require regulators to study whether their rules on consumer fee disclosures are adequate.

The House Judiciary Committee was poised May 13 to approve a consumer bankruptcy bill that would make it tougher for debtors to eliminate all their unsecured credit.

The bill, introduced by Rep. George W. Gekas, R-Pa., would use a formula to determine if debtors could use Chapter 7 to eliminate all their unsecured credit.

Meanwhile, a Senate Judiciary subcommittee passed a bill April 2 that would require higher-income consumers to repay some unsecured debt.

The bill would allow creditors to ask a judge to force consumers in bankruptcy to repay some unsecured debts, provided they prove debtors could afford to repay at least 20% of unsecured debt over five years.

The full Senate Judiciary Committee is expected to vote on the legislation late this month. Credit Unions

Following the House's lead, the Senate Banking Committee passed legislation April 30 that would let occupation-based credit unions serve an unlimited number of small companies. However, the bill, adopted on a 16-to- 2 vote, would impose stricter supervisory and commercial lending requirements on the nonprofit financial institutions than the House version.

Both bills would gut a Feb. 25 Supreme Court decision requiring credit union members to share a single, common bond.

The full Senate is not expected to consider the bill until at least June, but the credit union lobby is urging senators to vote before Memorial Day.

Under the Senate Banking bill, occupation-based credit unions could serve any unrelated company, provided it employs no more than 3,000 people.

The legislation-pushed through by Senate Banking Chairman Alfonse M. D'Amato and Sen. Paul S. Sarbanes of Maryland, the committee's ranking Democrat-would limit business lending to 12% of assets. It also would institute capital requirements and prompt corrective action standards similar to those placed on banks. Student Loans

In an overwhelming 414-to-4 vote May 6, the House passed legislation that would partially compensate lenders for an 80-basis-point cut in student loan rates set to kick in July 1.

The reduction was already scheduled to take effect in two months under a 1993 law. To appease lenders, the bills would provide banks a 50-basis- point federal subsidy on interest payments.

Bankers reluctantly accepted the deal, complaining that the rates would still be too low.

The legislation faces rough sledding ahead because critics say its $220 million to $300 million annual price tag is too high. President Clinton has vowed to veto the House version, and Senate Budget Committee Chairman Pete Domenici is expected to force lenders to absorb a smaller cut in rates- possibly 30 basis points. New Legislation Federal Housing Finance Board

Senate Banking Committee Chairman Alfonse M. D'Amato introduced legislation April 24 that would abolish the Federal Housing Finance Board, the government agency that regulates the 12 Federal Home Loan banks.

Under the bill, the Department of Housing and Urban Development would evaluate the Home Loan banks' investment practices, and the Office of Federal Housing Enterprise Oversight would be in charge of supervision.

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