Magazine article American Banker

Clinton May Tap FDIC to Pay for Housing Plan

Magazine article American Banker

Clinton May Tap FDIC to Pay for Housing Plan

Article excerpt

WASHINGTON -- The Clinton administration is considering the unprecedented step of tapping the Bank Insurance Fund to pay for an affordable-housing program, according to bankers opposing the plan.

American Bankers Association president Donald G. Ogilvie termed the plan "a backdoor raid" on the industry's insurance fund.

The federal insurance kitty was created 60 years ago to repay insured depositors when a bank fails. Banks feed the fund through semiannual insurance premiums that currently average 23.8 cents for every $100 of insured deposits.

The Clinton administration is considering pulling $15 million from BIF to pay for an affordable-housing program that was mandated. but not funded, by the Federal Deposit Insurance Corp. Improvement Act of 1991.

Seized Housing Assets

The law required the FDIC to start a three-year program subsidizing the sale of housing assets seized from failed banks to low-and moderate-income families.

The law envisioned that a separate appropriation would be approved by Congress to pay for the program, but none was ever passed.

Rather than fight in Congress for an appropriation, administration budget writers reportedly want to siphon money off from the BIF.

The Office of Management and Budget would not confirm the story Tuesday.

An agency spokesman said no details of the administration's fiscal year 1995 budget will be released until Feb. 7 when it is formally unveiled.

|Blatant Confiscation'

But FDIC officials are aware of the plan and have alerted bankers. …

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