Panel Votes to Abolish S&L; Insuring Agencies

A House-Senate conference committee Tuesday voted to abolish the U.S. agencies that regulate and insure accounts at federal savings and loan associations and transfer their operations to other agencies.

The action came on the opening day of a conference to resolve differences between House and Senate bills to bail out the thrift industry by closing or merging failing associations.

The bills would authorize a $50-billion federal bond issue to close hundreds of S&Ls;, tighten financial rules for thrifts and increase penalties for bank fraud. The Senate bill passed in April; the House legislation was approved in June.

Most functions of the Federal Home Loan Bank Board and its Federal Savings and Loan Insurance Corp. would be transferred to the Federal Deposit Insurance Corp., the bank insurer that has taken over operations of many failing thrifts.

The bill would also create a Resolution Trust Corp. to manage and resolve failed S&Ls; and establish an office of thrift supervision in the Treasury Department.

Late Tuesday, the conferees also voted to establish a regional office in Dallas to investigate S&L; fraud in the Southwest. The House bill originally called for such offices in both Dallas and Los Angeles, while the Senate version provided for none. The compromise cut out the proposed Los Angeles office.

House Speaker Thomas Foley urged members to work quickly so that Congress could pass the bill before its summer recess begins Aug. 4.

A key issue that the conference must decide is whether the total cost of the bill, estimated at $157 billion by the Bush Administration and much higher by other economists, will be included in the federal budget.

Treasury Secretary Nicholas Brady wants the plan off-budget and has hinted that he might recommend that Bush veto the bill if the cost is on-budget. The House voted to put the costs in the budget, but the Senate kept the costs off the budget.