No Breakthrough Yet on Bank, S&L; Funding Bills

House and Senate members and their staffs held intense discussions Friday in an effort to develop compromise legislation to provide $70 billion for the bank insurance fund and $80 billion for the savings and loan cleanup.

The legislators, who plan to adjourn next week before the Thanksgiving holiday, do not yet feel the last-minute pressures that usually push potential legislation to a successful passage.

Meetings will continue today and Sunday, but no votes have been scheduled on either piece of legislation.

Key House members said the Senate version of the bank bill is unacceptable because it allows interstate banking. The House twice rejected bills with the provision and won’t accept it this time, sources said.

“I don’t see any way interstate banking can get past the House,” a key congressional aide said. But the Senate is not ready to surrender on the issue, the aide said.

The House and Senate versions contain $70 billion in new borrowing authority for the deposit insurance fund, which will run out of money by year’s end. The fund protects deposits up to $100,000. Congressional action is essential to permit the government to seize and close financially crippled banks without jeopardizing depositors.

The $70 billion would be repaid with premiums collected from banks. If the recession deepens and more banks fail, the industry may be unable to pay the full amount, leaving the financial burden on taxpayers.

The prospect of voting for a bank bailout frightens members of Congress, already uneasy about the soaring cost of the savings and loan cleanup.

The government has spent $80 billion to close down defunct thrifts and pay off their depositors. The Administration has asked for another $80 billion for the Resolution Trust Corp., the agency responsible for closing crippled thrifts, paying off depositors and disposing of their assets.

But the House Banking Committee adopted a bill Wednesday authorizing just $20 billion. The legislation said the remaining $60 billion must be raised by trimming government spending programs. RTC funding must be approved by the full House and Senate before the agency can receive new funds.

A possible compromise introduced in the House by several influential Democrats calls for the RTC to receive “such sums as shall be needed” for the agency to operate until April of next year. By omitting a number, the measure would enable members of Congress to avoid voting for a huge sum of cash for the unpopular RTC in the same week that they vote for a potential bank bailout.