Senate Banking Committee Chairman Alfonse M. D'Amato introduced legislation granting a one-year extension to the FHA reverse mortgage program. That program and several other government housing initiatives would be kept alive through 1996 as Congress debates the future of the Department of Housing and Urban Development, which runs the FHA programs.
Previously Sen. D'Amato introduced S 1409, which would reauthorize the reverse mortgage initiative through 2000. The House has already passed a five-year reauthorization of the program.
Sen. D'Amato said the one-year stopgap funds are needed to protect housing programs while Congress decides their future.
Reverse mortgages allow elderly homeowners to receive monthly payments based on the equity in their homes.
ACTION ON LEGISLATION
The House passed a bill stripping Retirement CDs of federal deposit insurance. The lead sponsor, Rep. Marge Roukema, R-N.J., said the lifetime payout features of the CDs raised "serious safety and soundness concerns" for banks.
Retirement CDs, like annuities, offer tax-deferred accumulation and guaranteed lifetime payments after maturity. A handful of banks have introduced the products to compete with insurance companies.
Similar legislation is pending in the Senate.
Legislation to rescue the Federal Agricultural Mortgage Corp. has now passed both the House and Senate. But for the moment, at least, it's not going any further.
Both bodies have agreed to grant new powers to the unprofitable farm mortgage securitizer and ease its capital requirements. But the Farmer Mac legislation passed by the Senate on Dec. 21 includes a new, quasi- governmental conservation foundation that the House stripped out when it approved the bill two days earlier. The legislation is sponsored by Rep. Bill Emerson, R-Mo., and Sen. Richard Lugar, R-Ind.
Banking groups, which along with Farmer Mac itself have been the main backers of the legislation, are still hoping that the House and Senate can reach a compromise.
House Banking Committee Chairman Jim Leach said he will try to bring his Glass-Steagall/regulatory relief legislation to the House floor without bankers' support if the industry can't strike a deal over insurance restrictions in the bill.
The House bill has been stalled because of a deadlock between banks and the insurance industry. Negotiations between a group of large banks and insurance industry trade groups have produced few signs that an agreement can be reached.
The Senate Banking Committee's regulatory relief bill could be approved by the Senate soon.
The regulatory relief bill would streamline a number of laws, including Truth-in-Lending. However, most Community Reinvestment Act changes have been stripped from the bill.
Though the bill is watered down from its original version, industry lobbyists say they are eager for approval.
Thrift Fund Rescue
Congress has approved a plan to rescue the Savings Association Insurance Fund. The legislation is part of a larger budget bill that President Clinton vetoed last month.
The bailout, which the Clinton administration supports, would capitalize the insurance fund by charging thrifts a one-time fee of about 85 basis points. The bulk of annual interest due on thrift bailout bonds would be paid by banks.
Rep. Leach made his support for the narrow financial fix contingent upon a commitment by Sen. D'Amato to move quickly on separate legislation converting thrifts into commercial banks.
Thrift Charter Conversion
Sen. D'Amato introduced a bill eliminating the federal thrift charter and forcing federally chartered thrifts to convert to banks. Introduction of the bill made good Sen. D'Amato's promise to move quickly on the thrift charter issue. The New York Republican has said he wants to get the bill through the Senate by Easter.
S 1415 is a copy of the thrift conversion provisions included in HR 2363 drafted by the House Banking Committee.
Thrifts with bad-debt reserves would be protected from $3 billion in back taxes in a plan drafted by House Ways and Means Committee Chairman Bill Archer. The proposal, which is included in Congress' larger balanced budget bill, would suspend "recapture" of tax breaks that thrifts received for their bad-debt reserves.
Currently, thrifts that convert to commercial banks must pay back taxes on the reserves. Under the bill, reserves taken before 1988 would be exempt from taxes. Reserves taken in 1988 or later would be subject to tax, but recapture could be delayed for two years if a thrift meets a residential loan test.
The bill is a key to the thrift industry's support of the insurance fund rescue.