In a major victory for consumer groups, the Carter administration is planning to reverse its earlier position and support the cooperative bank bill in the Senate.
A Treasury Department spokesman, Roger Altman, is expected to testify at Senate Subcommittee on Financial Institutions hearings today that the administration no longer thinks the bill requires more study. That view was expressed in his testimony before House subcommittee hearings on the same bill last year. The bill narrowly passed in the House.
Instead, Altman will present an administration compromise that essentially calls for passage of the bills with lowered levels of funding recommended, according to White House sources.
The bill proposes a National Bank for Consumer Cooperatives that will provide market-rate loans and technical aid programs in training and education for new and existing cooperative businesses. It is expected to be a boon to low-income and minority investors.
According to White House sources, the Treasury Department was the lone holdout against administration support of the proposed bill. Both the agriculture and Labor Departments had endorsed it.
On Monday, however, the administration held a meeting at which a presidential decision memo was given to the Treasury Department, ordering it to drop its opposition and fall in line.
Last week, at a meeting with several consumer advocates at the White House, Carter implied that there would be administration support for the bill when the time came.
The details of the compromise as disclosed by administration sources to The Washington Post are:
Reducing fuding committed by the Treasury Department stocks in the bank from $500 million over five years to $200-to $300 million over three years.
Reducing a proposed $250 million in Treasury funding over five years for a Self-Help Development Fund for low-income borrowers to $50 million to 75 million over three years.
Reducing the new bank's borrowing authority in money markets from 10 times the bank's capital in the bank, or $5 billion to between $1 billion and $1.5 billion.
Treasury Department officials were said to have opposed the bank's creation and had proposed instead expansion of the existing Community Services Administration.
But, according to White House sources, President Carter's apparent interest in the plan, and Mrs. Cater's reported interest in a cooperative venture in New York's South Bronx, strengthened the hand of those in the administration supporting the bill.
When informed about the Carter administration turnabout, Rep. Fernand St. Germain (D-R.I.), chairman of the House Financial Institutions Subcommittee, and a pro-bill witness at yesterday's hearings, said:
"This is a tremendous victory for the American consumer. I am delighted that this important piece of legislation has been added to the domestic agenda of President Carter."