Emergency Banking Bill : House Panel Approves Strengthening FSLIC

The House Banking Committee passed an emergency banking bill Tuesday to give federal regulators more power to deal with failing banks and savings associations.

The bill would refinance the Federal Savings and Loan Insurance Corp. (FSLIC), which insures savings accounts at federal savings and loan associations, and give banking agencies more power to arrange out-of-state acquisitions for failing financial institutions.

The legislation, approved 47 to 1, now goes to the full House. Sponsors hope the measure can raise $15 billion to $30 billion for FSLIC over the next five years to help protect depositors in failed savings and loans and provide the agency with funds to close unsafe associations.

Federal Home Loan Bank Board Chairman Edwin J. Gray, who administers FSLIC, said the insurance fund was low. FSLIC insures a maximum of $100,000 in each savings account.

The expanded takeover power was needed because more than 100 banks have failed this year and more are expected to fail, especially in oil-producing states hurt by falling oil prices.

The bill includes a provision to reduce the amount of time that financial institutions can hold checks for before the funds are credited to the depositor’s account. The committee also knocked out a section that would prohibit subsidiaries and affiliates of a bank holding company from conducting insurance activities.