WASHINGTON -- On the eve of a scheduled House floor vote, the heads of the four federal banking agencies mounted a new drive to persuade lawmakers to approve funding for failed savings and loans.
"Failure to provide timely funding for the RTC can only undermine confidence in the government's willingness to honor its most solemn promises," the four said, referring to the Resolution Trust Corp.
"Those promises backstop the safety and stability of our entire financial system, and provide incalculable benefits to millions of Americans not directly involved in the thrift cleanup."
Action Expected Today
The letter, signed by the heads of the Federal Reserve Board, the Federal Deposit Insurance Corp., the Office of Thrift Supervision, and the Office of the Comptroller of the Currency, was sent to House Speaker Thomas S. Foley, D-Wash., and Republican leader Robert Michel of Illinois.
The House Rules Committee, which serves as the gatekeeper to the House floor, is scheduled to take up the funding package today, with floor action following.
Although banking committee sources said last week they were confident the long-delayed vote would be held this week, the House leadership remains nervous about the vote count. A defeat would be seen as a setback for the Clinton administration.
The bill approved by the House Banking Committee would free up $18.3 billion in previously authorized money for the RTC, and would make $16 billion available to the infant Savings Association Insurance Fund. However, the bill would set tough conditions for release of the SAIF funds.
Also Monday, thrift analyst Bert Ely warned that a failure to appropriate new money for failed thrifts would force regulators to impose what would amount to "a special, punitive tax on America's healthy thrifts."
A rate differential of at least 20 basis points, almost .25%, most likely will develop in 1997 when Bank Insurance Fund premium rates plunge to an average rate of 3 basis points or so, Ely wrote in a letter to House Banking Committee chairman Henry B. Gonzalez, D-Tex.
In their letter to the House leaders, the bank regulators also said that a funding package would "avoid further costly delays in thrift resolutions, delays which have already saddled the American taxpayer with substantial and unnecessary extra costs."
The letters were signed by Fed chairman Alan Greenspan, acting FDIC chairman Andrew C. Hove, acting OTS director Jonathan L. Fiechter, and Comptroller of the Currency Eugene A. Ludwig.
Despite the industry's nervousness over SAIF funding, deputy Treasury Secretary Roger Altman said he was not concerned about the possibility that SAIF would not be fully funded and that, as a result, thrift insurance premiums could be significantly higher than banks' assessments in a few years.
He said he was "not aware of any plans" to merge the SAIF and the Bank Insurance. Fund.