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Budget Bill Has CRA Overhaul (2 Articles)
WASHINGTON (AP) -- Plans to pare down an important fair lending law and
revive the savings and loan industry's deposit insurance fund were added to
a new budget bill Monday, a move that places both issues on the legislative
House Banking Committee Chairman Jim Leach released details of a major
budget bill the House Banking Committee is expected to consider Tuesday, a
bill that represents the panel's chunk of the federal budget process.
Significantly, Leach added controversial revisions of the Community
Reinvestment Act, or CRA, measures which the Banking panel previously
approved as part of a broad bank deregulation bill.
The Clinton Administration strongly opposes a weakening of CRA and has
threatened a veto. The banking committee in June passed CRA amendments that
would exempt about 90 percent of the industry from the fair lending law and
limit regulators' enforcement powers.
A Banking Committee spokesman said that language had been taken from the
deregulation bill and placed into the budget measure -- a high-profile bill
that's almost assured of passage.
The other major piece would merge the bank insurance fund with the separate
S&L industry deposit insurance fund by Jan. 1, 1998. Regulators say the
thrift fund, depleted by the massive thrift industry failures, faces
insolvency if one large S&L collapsed.
The Leach proposal would have FDIC-member banks share in interest payments
on Financing Corporation bonds, securities which the government sold in the
1980s to help revive the S&L insurance fund.
The bill also would abolish the Office of Thrift Supervision and
restructure the Federal Deposit Insurance Corp. Thrifts would have to
convert their charters to national banks or state banks by Jan. 1, 1998, or
face liquidation, according to the proposal.
WASHINGTON (AP) -- House Republicans said Tuesday a plan to convert
federal savings and loans into national banks has historic significance for
the nation's financial system. Democrats complained the bill that includes
the plan would unfairly gut federal housing and fair-lending programs.
The House Banking Committee is considering a sweeping budget bill that
would trim $5.6 billion in federal spending next year by merging the
savings and loan and bank deposit insurance systems and phasing out thrift
regulators. The bill also would terminate affordable housing programs run
by the Federal Deposit Insurance Corp. and the Resolution Trust Corp. and
scale back the Community Reinvestment Act, a major fair-lending law.
The committee is under orders from the House to recommend $2.4 billion in
budget cuts over the next seven years.
Rep. Joe Kennedy, D-Mass., complained that Democrats were given little
notice about the broad scope of the committee's budget bill, which also
includes major reforms to federal housing programs. Kennedy said the $2.4
billion target is a ``self-imposed mandate by Republican leadership'' and
that he would offer amendments to ``do the best I can to protect additional
Rep. Jim Leach, R-Iowa, the committee chairman, defended the cuts, saying
the Clinton administration had proposed a $1.3 billion increase in bank
fees, as well as higher flood insurance premiums to meet budget goals.
Leach announced Monday that revisions of the Community Reinvestment Act
approved by the committee earlier this year would be stripped from a broad
bank deregulation bill and inserted into the budget measure.
The administration strongly opposes weakening the fair-lending law and has
threatened a veto. Democrats say the bill, approved by the Banking
Committee in June, would exempt about 90 percent of the industry from
requirements and limit regulators' enforcement powers.
A move to place the lending revisions in the budget measure -- a
high-profile bill that is almost assured of passage -- places the proposal
on the legislative front burner.
The other major piece of the legislation would merge the bank insurance
fund with the separate S&L industry deposit insurance fund by Jan. 1, 1998.
Regulators say the thrift fund, depleted by the massive thrift industry
failures, would face insolvency if one large S&L collapsed.
The Leach proposal calls for FDIC member banks to share in interest
payments on Financing Corp. bonds, securities the government sold in the
1980s to help revive the S&L insurance fund. The bill also would abolish
the Office of Thrift Supervision and restructure the FDIC.
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