WASHINGTON -- The Bush administration will introduce legislation next week that would eliminate as may as 30 regulations that bankers consider excessive.
The administration will argue that the economy would benefit if funds now spent to comply with the rules were used instead to make loans.
Law's Strictures a Target
Many of the bill's provisions will seek to ease the stict operating standards for banks required by last year's banking law.
Unlike most banking bills, the industry is solidly behind this initiatvie, according to officials at all the major trade groups. Regulators also support the measure.
The unusual consensus may not matter much in the short run. With only 30 days left on the legislative calendar, the prospect for passing the bill this year are slim. But the administration would likely pick up the fight again next year.
Praise from the Industry
Bankers are applauding the Treasury Department for going to bat for the industry on an issue they feel is critical to the future of banks.
"They are doing a real service by putting this all down in one place," said one trade group official who has seen Treasury's bill.
Earlier this wek, the American Bankers Association estimated that banks spent $10.7 billion last year complying with government regulations. That was equal to 59% of the industry's profits in 1991. The findings were based on a survey sent to 10,000 banks and completed by 1,000.
The proposed legilation's specifics are still be debated by the Treasury Department and the White House. But sources said one thing the bill won't do is seek major changes in controversal regulations such as the Community Reinvestment Act, because such a move would arouse powerful consumer interests and endanger the rest of the package.
"It isn't completely a kitchensink bill because they want the things in there to be defensible and reasonable," said a trade-group representative who has seen the bill.
Most of bill will focus on easing requirements in last year's banking law. They govern everything from how much a bank can pay its officers to how it makes loans. Regulators are supposed to have them in place by August 1993.
Regulators and bankers complain that the standards amount to Congress' micromanaging the industry.
The Treasury Department had intended to tack some regulatory relief provisions on to an interstate branching bill. But the coalition of bankers and insurers backing that legislation fell apart Wednesday, and the prospect of putting it back together again this year is very slight.
Goals of the new bill include:
* Easing limits on loans to insiders by not counting secured loans toward the maximum amount a bank can lend to its officers and directors.
* Eliminating rules that require banks to have outside auditors attest that management is complying with safety and soundness standards.
* Permintting banks in rural areas with less than $100 million in assets to file streamlined CRA reports. These banks might be allowed to certify compliance for themselves, assuming no discrimination complaints had been lodged.
* Protecting any bank with an "outstanding" CRA rating from challenges under the act.
* Permitting special-purpose banks such as credit-card banks to satisfy CRA requirements with loans to customers in distressed areas outside their own markets.
* Repealing rules requiring banks to give 90 days notice when closing an automatic teller machine or a branch.
* Eliminating new reports on small business and farm lending. A study would be proposed to find a new way to collect this information.
Provisions that are still under consideration by the Administration include the following:
* Eliminating the interest-rate cap that banks must observe when buying uninsured brokered deposits over $100,000. This rate limit, required by Congress, was imposed June 16 by the Federal Deposit Insurance Corp. The cap is 130% of the yield on Treasury securities of a similar maturity, plus 75 basis points.
* Repealing the law mandating regulators to set specific real estate lending guidelines, such as loan-to-value ratios.