Momentum is building for enactment this year of a regulatory relief bill that would cut red tape and permit the payment of interest on required reserves and business checking accounts.
The Senate Banking Committee is scheduled to vote Thursday on the long- simmering Shelby-Mack regulatory relief bill, which was introduced last fall and would roll back more than 40 banking rules.
Meanwhile, Rep. Marge Roukema, chairwoman of the House Banking financial institutions subcommittee, plans a hearing July 16 on a similar measure. The full committee aims to approve a bill before the August congressional recess, Capitol Hill and industry sources said.
The full House and Senate could vote on the measures by September, the sources said.
Bankers generally favor key provisions of both proposals, including: payment of interest on reserves, streamlining of call reports and Truth-in- Lending Act disclosures, and elimination of the requirement that thrifts owned by holding companies notify regulators 30 days before paying shareholder dividends.
Also under consideration are streamlining rules that permit banks to set up parent holding companies, requiring regulators to take into account the presence of credit unions and other nonbanks when evaluating bank mergers, as well as letting banks repurchase shares of their own stock to reduce excess capital or for other valid business reasons.
Lobbyists give the legislation a good chance of enactment because lawmakers, particularly Republicans, are looking for pro-bank measures after voting against the industry on the financial reform and credit union bills.
"There is a recognition the banking industry got hammered this year," said Ronald K. Ence, legislative affairs director for the Independent Bankers Association of America. "There is a desire to give something back and smooth things over with the banking industry."
Rep. Roukema said such legislation would be "an excellent trophy" for Republicans seeking to reduce government burden.
Yet the very things that have helped banks stall legislation they oppose-the early adjournment of Congress set for Oct. 9 and partisan squabbling-could work against them in this case.
For instance, Senate Banking Democrats are demanding postponement of Thursday's vote because of political differences with co-sponsor Sen. Richard C. Shelby over the credit union bill, Hill sources said.
Democrats oppose the Alabama Republican's plan to amend legislation easing credit union membership limits to exempt small banks from the Community Reinvestment Act. They have threatened to obstruct the committee vote on the Shelby-Mack bill unless it is delayed until after the Senate vote on the credit union bill, which is tentatively set for July 17 or 20.
Also, Sen. Chuck Hagel, R-Neb., may try to tack his Federal Home Loan Bank reform legislation onto the regulatory relief bill. Though that would garner even stronger support from community bankers, Senate Banking Committee Chairman Alfonse M. D'Amato is said to oppose combining the two measures.
Besides these issues, provisions in the Senate bill to repeal anti-tying rules and let affinity groups such as university alumni associations get paid for helping sell mortgages are controversial. These were among 20 measures House Banking left out of its draft bill to ensure speedy approval.
The banking industry itself is divided over whether it favors payment of interest on business checking. The House draft includes a compromise that would let banks offer 24-transaction-per-month money market accounts as an interim step for six years.
A provision in the House draft could also be controversial. It would direct the Federal Deposit Insurance Corp. to pay as much as 25% of the banking industry's annual Fico bond payments if the reserve ratios of the bank or thrift insurance funds exceed 1.35%.