Legislative Update

American Banker, June 13, 2002 | Go to article overview

Legislative Update


ACTION ON LEGISLATION

Deposit Insurance Reform

S 1945, HR 3717

The House, by a vote of 408 to 18 on May 22, approved legislation sponsored by Rep. Spencer Bachus, R-Ala., that would overhaul the deposit insurance system.

The bill remained largely similar to the version the Financial Services Committee approved on April 17, though there were a few key changes. A provision was removed that would have allowed the Federal Deposit Insurance Corp. to charge fast-growing institutions an additional premium beyond the bill's across-the-board hike. Also, the proposed cap on coverage for municipal deposits was lowered to $2 million, from $5 million in the earlier version. (The current limit is $100,000.)

It is unclear when, or if, Senate Banking Committee Chairman Paul Sarbanes plans to hold a vote on a companion bill sponsored by Sen. Tim Johnson, D-S.D.

The House and Senate bills are substantially similar. They would raise the general deposit insurance coverage limit to $130,000 per account, significantly increase the coverage for individual retirement accounts and municipal deposits, merge the bank and thrift insurance funds, and give the FDIC more flexibility in assessing premiums.

Regulatory Relief

HR 3951

The House Financial Services Committee, by a voice vote on June 6, approved a bill that seeks to provide regulatory relief to banks, thrifts, and credit unions.

Among other things, the bill, sponsored by Rep. Shelley Moore Capito, R-W.Va., would clarify the merchant banking provisions of the Gramm-Leach-Bliley Act to ease the restrictions on cross-marketing; ease restrictions on interstate branching; shield national banks from state capital requirements when establishing intrastate branches; exclude the loans that credit unions make to nonprofit religious organizations from business-loan limits; and eliminate some reports that bank executives and shareholders have to make on loans to insiders.

The committee approved a handful of amendments, including one offered by Rep. Gary L. Ackerman, D-N.Y., that would require depository institutions to notify customers when "adverse" information about them is reported to a credit agency.

Other successful amendments would let credit unions offer wire transfer and other services to potential members and invest in investment-grade securities.

Senate Banking Committee member Richard Shelby, R-Ala., is drafting his own regulatory relief bill that he plans to introduce soon. Senate Banking Chairman Paul Sarbanes, D-Md., has not expressed interest in taking up a regulatory relief measure.

Enron-Inspired Legislation

HR 3763, (Senate bill has not been formally introduced)

The Senate Banking Committee is scheduled to vote Tuesday on Enron-inspired legislation, sponsored by panel Chairman Paul Sarbanes, D-Md., to overhaul auditing, corporate governance, and research analyst rules.

The vote had been scheduled for May 21 but was postponed because Sen. Sarbanes did not have the support of all the Democrats on the committee. Last week panel members Zell Miller, D-Ga., and Evan Bayh, D-Ind., lifted their objections and cleared the way for a committee vote.

Among other things, the bill would create an oversight committee for the accounting industry; prohibit external auditors from performing internal audit work or consulting on services such as financial information system design, though the committee could grant exceptions; and codify new investment bank analyst rules recently promulgated by the Securities and Exchange Commission.

The House on April 14 approved the Corporate and Auditing Accountability, Responsibility, and Transparency Act by a vote of 334 to 90.

The bill, sponsored by House Financial Services Committee leaders Michael G. Oxley, R-Ohio, and Richard Baker, R-La., also would overhaul the rules governing corporate disclosure and auditing. …

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