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Banking legislation in the House.

The House of Representatives began consideration of the most sweeping changes to U.S. Banking law since the Depression las Wednesday. As NCW went to press consideration of the bill was expected to extend at least until today.

City and town officials will be watching provisions of the bill which would further encourage community reinvestment by banks and other financial institutions.

The way was cleared for consideration of the bill when the Chair of the House Banking Committee, Rep. Henry Gonzalez (D-Tex.) and the Chair of the House Energy and Commerce Committee, Rep. John Dingell (D-Mich.) developed language dealing with the separation of banking from other commercial activities. The bill is expected to be controversial and the rule establishing the terms of the debate was passed on a narrow 210 to 208 vote.

Pushing the need to pass the bill are recent projections of a large deficit in the Federal Deposit Insurance fund early next year. The legislation would create billions in new borrowing authority for the insurance fund with the borrowings intended to be repaid from higher deposit insurance premiums to be charged to the banks.

Out of 78 proposed amendments submitted to the Rules Committee, 24 were selected for consideration on the floor. The following amendments will be of particular interest to cities.

An amendment submitted by Rep. Barney Frank (D-Mass.) which would create an affordable housing disposition program for properties acquired by the FDIC through foreclosures. This program woudl be modeled on the current program for S&L foreclosed properties being managed by the Resolution Trust Corporation. Passage of this amendment would open up opportunities for cities to assist low and moderate income individuals] to acquire affordable housing.

Representative Joseph Kennedy Jr. (D-Mass.) is offering an amendment which would require a bank seeking to make an acquisition, branch across state lines or affiliate with a securities firm to have a "satisfactory" or better CRA (Community Reinvestment Acting Rating). The amendment would further require bank regulators to establish systems to test for and detect violations of fair lending and Community Reinvestment laws.

Representative Ridge (R-Penn.) is offering an amendment to clarify his "green-lining" incentive program which would lower the insurance premiums for banks to the extent that they increase loan commitments into distressed neighborhoods.

An amendment offered by Rep. Steve Neal (D-Mass.) would expand the reporting required by banks of small business lending and would increase the frequency and geographic location of small business loans for interstate banking institutions.

On the subject of decreasing the amount of federal deposit insurance protection, an Amendment offered by Representatives Wylie (R-Ohio), Gonzalez (D-Tex.) and Kleczka (D-Wis.) proposes that coverage be reduced to $100,000 per individual in any one bank (with an extra $100,000 of coverage for an IRA). Going the other direction Rep. Towns (D-NY) is proposing an amendment that the deposits of nonprofit organizations be fully insured regardless of size
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Author:Peterson, Doug
Publication:Nation's Cities Weekly
Article Type:Brief Article
Date:Nov 4, 1991
Words:482
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