Private Mortgage Insurance

The House Banking Committee March 19 approved legislation that would automatically cancel private mortgage insurance when a borrower's equity in a home reaches 25%.

The bill, introduced by Rep. James V. Hansen, R-Utah, also would require lenders to make annual disclosures showing how much a borrower would have to pay on the loan to avoid mortgage insurance.

Senate Banking Committee Chairman Alfonse M. D'Amato canceled his panel's March 17 vote on similar legislation when fellow Republicans told him they wouldn't support the bill. The New York lawmaker said he would try to negotiate a deal and bring the legislation before the committee again soon.

Currently his plan would require lenders to cancel mortgage insurance automatically when equity in a home reaches 20%. New Legislation

Credit Unions

Legislation to ease membership requirements for federal credit unions was introduced March 20 by Reps. Steven LaTourette, R-Ohio, and Paul Kanjorski, D-Pa.

The bill would amend the Federal Credit Union Act to allow credit union membership to "one or more groups, each of which has a common bond."

The bill would nullify a federal appeals court decision barring occupation-based credit unions from enrolling employees at unrelated companies. The Supreme Court plans to review the decision this year.

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

Financial Modernization

Treasury Secretary Robert Rubin is expected to unveil the Clinton administration's plan for financial reform any day. It is widely believed the White House plan will recommend that lawmakers let banks invest in a limited amount of nonfinancial operations, but still in question is how for the administration will go.

Recognizing there is broad support for some mixing of banking and commerce, House Banking Committee Chairman Jim Leach has repeatedly urged lawmakers to keep cross-industry mergers as small as possible. Rep. Leach's bill would let bank subsidiaries enter many new businesses directly but would bar affiliation between banks and nonfinancial firms.

Other lawmakers have introduced two additional financial modernization proposals.

Sen. D'Amato and Rep. Richard Baker introduced identical bills Feb. 11 that would remove all barriers preventing banks from affiliating with other types of companies. Rep. Marge Roukema's plan would let banking companies earn up to 25% of their revenue from nonfinancial business lines.

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 for using 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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