Senate and House banking committee leaders said yesterday that they will proceed with legislation changing the federal deposit insurance system even though action on other pending banking measures appears to be stalled for the moment.
Sen. Jake Garn (R-Utah) announced yesterday that he would hold a series of hearings on the Federal Deposit Insurance Corp. and the Federal Savings and Loan Insurance Corp., the government agencies that insure deposits in banks and savings institutions. Among the topics to be discussed are the adequacy of the examination process and the size of the funds, risk-based premiums, disclosure and capital requirements and enforcement.
Other issues include how to handle failed institutions, how the rules should vary for different institutions, and the role of private insurance. The committee also is expected to discuss possible merger of the two insurance funds. No bill has yet been drafted.
On the House side, Rep. Fernand St Germain (D-R.I.) said Tuesday he plans to hold hearings soon on bank deposit insurance, money laundering, consumer protections and closing the "South Dakota" loophole, through which banks chartered in that state are able to underwrite insurance. An aide said the deposit insurance hearings would probably begin before the August recess.
At the request of the FDIC and Federal Home Loan Bank Board, St Germain earlier this year introduced legislation that would permit risk-based premiums, forcing institutions engaging in risky activities to pay a higher insurance rate. The FDIC also has requested more enforcement powers, fees for extra examinations and a national rule on payoff priorities. The FHLBB wants increased premiums and the power to veto investment activities of state-chartered thrifts.
Although neither chairman would admit that the major banking bills are stalled, both said they have decided to press ahead with deposit insurance reform without waiting for passage of the more comprehensive legislation. Garn surprised his audience at a press conference yesterday by saying that he had not yet decided on the 1985 version of his comprehensive banking bill.
A 1984 version containing additional asset powers for banks overwhelmingly passed the Senate last year but died when the House failed to act. Deposit insurance legislation, he added, is not intended to have any effect on the comprehensive bill, yet it could move ahead of the omnibus bill if the more comprehensive bill were delayed.
Last month, St Germain's committee passed bills that would close the nonbank-bank loophole that allows retailers to enter the banking business and would authorize regional interstate banking as a prelude to full nationwide banking within five years. This is seen by opponents as a license for big banks to seize control of the banking system.
However, the package has received a cool reception in the House Rules Committee because of the opposition of Chairman Claude Pepper (D-Fla.). Banks in his state would be significantly affected by competition from New York and California banks in Florida, so Pepper is taking his time on the bill.
In a telephone interview yesterday, he said, "I'm not sure a majority of the committee is favorable to the bill. The banking committee will have to give us a little latitude." He added it was not likely the bill would come up before the fall.