Action on legislation Bankruptcy

The House approved bankruptcy reform legislation on a 306-to-118 vote June 10.

Sponsored by Rep. George W. Gekas, R-Pa., the bill would make it tougher for consumers to eliminate unsecured debts in bankruptcy. It would use a formula based on income and living expenses to determine whether consumers may discharge unsecured debts in Chapter 7 or must repay them in Chapter 13.

Consumers would be barred from filing for Chapter 7 if they could afford to cover their living expenses and repay all secured debt and at least 20% of unsecured debt. Those earning less than the median income would be exempted.

A Senate vote is expected in July. Education Savings Accounts

The Senate on June 24 voted 59 to 36 for compromise legislation that would expand education savings accounts, falling short of the two-thirds necessary to override a promised presidential veto.

Sponsored by Sen. Paul Coverdell, R-Ga., the legislation would let parents contribute $2,000 annually to tax-free accounts for a child's education costs-quadrupling the current limit. It also would widen permitted spending beyond college expenses to include elementary and secondary school costs.

The House passed the same bill, sponsored by Speaker Newt Gingrich and House Ways and Means Committee Chairman Bill Archer, on a 225-to-197 vote June 18. It was 57 votes shy of a veto-proof majority.

The Clinton administration objects because it says the accounts would use taxpayer money to boost private schools and encourage students to abandon public schools. Pending Legislation Financial Modernization

The Senate Banking Committee is expected to vote in July or September on financial services reform legislation, but the odds are slim that the full Senate can approve such a complex bill before adjournment in early October.

The Senate is preoccupied with appropriations and many other issues, and the Clinton administration remains adamantly opposed to a provision requiring banks to enter new businesses through holding company units. The Federal Reserve Board supports this provision in order to maintain adequate oversight of the financial system, but the administration fears losing economic policymaking influence as a result.

During four days of hearings on the legislation in June, Senate Banking Chairman Alfonse M. D'Amato urged the administration and the Fed to settle their turf war. The New York Republican said he was "very encouraged" that compromises could be reached with the administration, bankers, and other opponents.

In a historic vote, the House on May 13 voted 214 to 213 for legislation that would overhaul the financial services industry and allow mergers among banking, securities, and insurance firms. Sen. D'Amato plans to use the House bill as a starting point. Credit Union

Senate Majority Leader Trent Lott has tentatively scheduled a vote on legislation that would ease credit union membership limits for July 17 or July 20. However, credit union lobbyists remain concerned that appropriations and other controversial legislation could delay or prevent passage of the credit union bill.

The House on April 1 voted 411 to 8 for a bill that would let occupation-based credit unions serve any unrelated company, provided it employs no more than 3,000 people. The Senate Banking Committee bill, passed 16 to 2 on April 30, would ease membership limits similarly but impose stricter supervisory and commercial lending requirements.

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

Banks oppose the legislation and hope to spark as many amendments as possible to alter or at least slow the Senate bill's progress. Student Loans

As part of a higher-education spending bill, the Senate is expected to vote by next week on a permanent 50-basis-point subsidy for bankers to help pay for cuts in student loan rates.

The industry objects to a proposal by the administration and Sen. Ted Kennedy, D-Mass., that Congress establish a pilot program which would determine whether rates could be set by auction. Sen. Kennedy wants the auction pilot included in the spending bill.

The House approved a permanent 50-basis-point subsidy for bankers May 6.

On July 1, a 1993 law took effect that lowered the rate students pay by 80 basis points.

As part of a temporary compromise, the House and Senate on May 22 approved a 50-basis-point federal subsidy. The measure, which was included in a $216 billion transportation spending bill, would cover loans made until Oct. 1. Regulatory Relief

The Senate Banking Committee has postponed until July 29 voting on a regulatory relief bill sponsored by Sens. Richard C. Shelby, R-Ala., and Connie Mack, R-Fla. The committee was supposed to vote today, but Democrats forced a delay because they are upset by Sen. Shelby's planned amendment to the credit union bill that would eliminate community reinvestment requirements for small banks.

The bill would roll back more than 40 banking rules. Most of the provisions are modest, such as streamlining rules permitting banks to set up parent holding companies. One of the bill's most controversial provisions would repeal anti-tying rules. It also would permit interest payments on business checking accounts and required reserves.

Meanwhile, the House Banking Committee is drafting a regulatory relief bill of its own. A subcommittee hearing is scheduled for July 16. Private Mortgage Insurance

The House is scheduled to vote July 14 on compromise legislation that would reform private mortgage insurance. A Senate vote could come later in the month. Senate Banking Committee Chairman Alfonse M. D'Amato and House Banking Committee Chairman Jim Leach in recent weeks have pressed for passage of the legislation, which has been stalled since last fall. Under the compromise, coverage would be automatically canceled when a borrower's equity in a home reaches 22%.

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