Treasury Under Secretary John D. Hawke Jr. has worked for more than a year to convince Congress to shore up the Savings Association Insurance Fund. Lobbying on the issue is coming down to the wire as Congress plans to wrap up its work this month. American Banker staff writer Olaf de Senerpont Domis talked to Mr. Hawke Thursday.


Will the bill pass this year?

HAWKE: BIF/SAIF remains our No. 1 priority. I am very optimistic about the prospects of getting it through. I think there is a growing awareness on the Hill that they need to trim down the package to a scope that everybody can agree with. I would draw a distinction between agreeing with what's in the package and having disagreements about other things that ought to be added to the package.

I think we ought to be able to get a package that we can get broad agreement on in and of itself, and there may be some disappointments that some segments of the industry have about things that don't find their way in.

What do you expect to be included?

HAWKE: Something focused on BIF/SAIF would be essential. I think the environmental lender-liability issue is one that there is a very broad consensus on. I would hope that would be included.

What we get on the regulatory burden relief front depends on how controversial the package is. I think we need to see what comes out of the Senate Banking Committee's deliberations on that.

We've heard Treasury is pushing for a narrow bill, one that only fixes the thrift fund. Is that true?

HAWKE: I don't think that anybody in Treasury is saying that. We supported regulatory burden relief legislation. Our opposition in the past has gone to certain elements in the package that have affected the Community Reinvestment Act and other important consumer protections.

But I think one could take all of the controversial things out of the regulatory burden package and still have a very substantial piece of legislation that members of Congress could be very proud to have adopted.

This is an enormous bill, and the controversial portions of it are relatively minor. We could achieve a very wide degree of regulatory relief if everybody could agree on a noncontroversial package.

The problem comes because so many people want to add additional things on. Some people want to add powers legislation and restrictive insurance legislation - things that get into the controversial. I think the biggest threat to the bill is adding so much controversial stuff to it that it bogs the whole thing down.

So why are you optimistic?

HAWKE: Because there is widespread understanding about how important it is to get BIF/SAIF done, and to get it done this year.

The numbers haven't changed over last year and a half. The erosion of the Fico-available portion of the SAIF deposit base continues. The process of deposit migration hasn't really reached what it could be if there is no legislation.

If Congress goes home without acting, I think there could be a significant increase in deposit migration, and that could accelerate the erosion of the Fico base.

By the middle of next year, we might not be immediately confronting a Fico default, but we'd be getting close enough to the complete erosion of the cushion so that Congress would have to address that issue in a crisis context.

Certainly, the bankers are not going to come out any better if that's done. Right now, we have an opportunity to get this issue behind us. I don't know what the vehicle is going to be. The important thing is for the House and Senate to get together an acceptable package that can move.

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