Statement of Administration Policy: H.R. 3768 - Federal Deposit Insurance Corporation Improvement Act of 1991

(House Rules)
(Gonzalez (D) Texas)

The Administration supports House passage of H.R. 3768 in order to move forward with the legislative process on banking legislation. The Administration will continue to strongly support changes before enactment of this legislation, particularly the addition of provisions authorizing interstate branching, which would provide real banking reform. The Administration believes that Congress must in the end fix the problems of the banking industry by enacting real reforms, not just fund the problems by providing additional resources to the Bank Insurance Fund.

The Administration would oppose any amendment to H.R. 3768 that would add additional provisions regarding the insurance activities of banks since the legislation no longer includes interstate branching provisions.

The Administration particularly supports the provisions of H.R. 3768 that would:

—   Recapitalize the Bank Insurance Fund and set clear standards for prompt corrective action by regulators to resolve troubled banks.

—   Provide greater flexibility to bank regulators to avoid the premature shutdown of a weak bank that has clear prospects for recovery.

—   Improve regulation of foreign banks doing business in the U.S.

The Administration opposes and will seek changes in conference to the provisions of H.R. 3768 that Would:

—   Impose onerous reporting requirements on organizations that branch interstate.

—   Require the Federal Deposit Insurance Corporation (FDIC) to begin a new housing subsidy program funded by banks.

—   Impair the FDIC's ability to sell failed banks by imposing health insurance obligations on buyers of such banks.

—   Increase the deficit and require "pay-as-you-go" offsets of over $1 billion over four years (see below).

Scoring for Purposes of Pay-As-You-Go

OMB's preliminary estimate of the pay-as-you-go effects of H.R. 3768 is presented in the table below. Final scoring of this legislation may deviate from this estimate. If H.R. 3768 were enacted, final OMB scoring estimates would be published within five days of enactment, as required by the Omnibus Budget Reconciliation Act of 1990. The cumulative effects of all enacted legislation on direct spending and receipts will be issued in monthly reports transmitted to Congress.

Members have tried to address certain pay-as-you-go effects with language making the beginning Of particular programs contingent upon the availability of funds. However, the particular language does not specify that funding for these new programs requires an additional congressional action (e.g., an appropriation).

The bill's "too big to fail" provisions would decrease outlays, but it is not possible to estimate the size of the decrease. Similarly, estimates of the pay-as-you-go impact of the bill's provisions on pass-through insurance are not available at this time.

A budget point of order applies in both the House and the Senate against any bill that is not fully offset under CBO scoring. If, contrary to the Administration's recommendation, the House waives any such point of order that applies against H.R. 3768, the effects of this legislation would be included in a look-back pay- as-you-go sequester report at the end of the congressional session.

ESTIMATES FOR PAY-AS-YOU-GO
($ in millions)