House Sits on Deposit Insurance Reform Until 2006

WASHINGTON-Deposit insurance reform hit a snag yet again in 2005. Though the Senate squeaked out an agreement on the budget reconciliation legislation (S. 1932) with a 51-50 vote-Vice President Dick Cheney, who also serves as president of the Senate, broke the tie-the House did not come back into session to approve the amended bill. Because the Senate wiped out a number of health care provisions from the bill, the House, which previously approved the legislation 212-206, needs to take another vote on the amended conference report. The deposit insurance reform measure was added to the budget reconciliation bill to give it another vehicle on which to move; it will save the government some money. Both deposit insurance items are currently stalled until the House returns from the winter recess sometime in January. Previously, a statement from House Financial Services Committee Chairman Mike Oxley’s (R-Ohio) office said the House was expected to take up and approve the measure. “Deposit insurance reform has been a top priority of this Committee and the House for many years,” he said. “Our goals remain the same now as they were when federal deposit insurance first became law: to reassure Americans in the safety of their deposits and the banking system, and to protect taxpayers from being on the hook during times of economic crisis.” The deposit insurance provisions in S. 1932 include $250,000 coverage for certain retirement accounts; no increase for other accounts but provides the NCUA and the FDIC authority to index coverage to inflation every five years beginning in 2010; the merging of the Bank Insurance Fund and Savings Association Insurance Fund; the authorization of the FDIC to determine assessments; the replacement of the FDIC’s 1.25% target reserve ratio with a range of 1.15-1.50%; and authorization of a credit for banks and thrifts that paid into the deposit insurance funds prior to Dec. 31, 1996. It maintains parity for the NCUSIF, which NCUA and credit union lobbyists kept a vigilant eye on. “This bill is passing in a very non-traditional way,” CUNA Domestic and International Legislative Affairs Manager Katie Herberger observed. She explained that the House has passed a stand-alone deposit insurance reform bill, H.R. 4636, which is being used to make technical and conforming amendments to deposit insurance law. The Senate has not moved on this measure. -