House Votes to Expand FSLIC’s Powers

A bill to raise $15 billion for the Federal Savings and Loan Insurance Corp. and expand the powers of federal bank regulators to merge weak institutions with stronger ones was approved Tuesday by the House.

The bill, passed by voice vote and sent to the Senate, would direct the Federal Home Loan Bank Board to lend $3 billion to a financing corporation owned by member savings and loan institutions to float $15 billion in bonds for the insurance fund. The FSLIC insures $800 billion in deposits at more than 3,000 federally insured savings and loan institutions.

The bill would also expand the powers of federal bank regulators to take over failing institutions or merge financially weak ones with stronger S&Ls.;

Bailouts of failing savings and loan institutions are expected to total 122 this year, causing FSLIC’s reserve fund to drop to $1 billion from $2.5 billion, said Rep. Chalmers Wylie (R-Ohio).

The bill also includes legislation passed in January by the House that would require banks in most cases to clear in-state checks within four days of their deposit. It also includes the comprehensive housing bill passed last June by the House.

Rep. Fernand J. St Germain, (D-R.I.), chairman of the House Banking, Finance and Urban Affairs Committee, expressed frustration with the Senate’s inaction on both the housing and check hold bills. “Your Banking Committee hopes to be in conference on this legislation with the Senate Banking Committee on all four titles--I repeat, on all four titles.

“The integrity of the House is at stake,” St Germain said. “More importantly, the public interest demands a meaningful conference on all four titles.”

Both the House and Senate have approved appropriation bills to operate the Department of Housing and Urban Development during the current fiscal year, and House-Senate conferees reached tentative agreement Tuesday on a compromise bill totaling more than $50 billion. But the appropriation measure does not contain provisions for several new housing programs contained in the House’s authorization bill.

House action occurred a week after Majority Leader Jim Wright (D-Tex.) abruptly pulled the bill off the legislative docket. Wright said later that he was seeking assurances from the Federal Home Loan Bank Board that the agency would not sell a number of Texas S&Ls; to out-of-state interests.