[Congressional Record Volume 146, Number 36 (Tuesday, March 28, 2000)]
[Senate]
[Pages S1810-S1811]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        DEPOSIT INSURANCE FAIRNESS AND ECONOMIC OPPORTUNITY ACT

  Mr. EDWARDS. Mr. President, I rise today in support of legislation 
Senator Santorum and I are introducing, the ``Deposit Insurance 
Fairness and Economic Opportunity Act.'' This legislation would 
increase the amount of money that is available for banks and thrifts to 
lend in their communities.
  Our financial services industry is incredibly strong, and the public 
benefits from this strength. Last year, this Senate passed 
comprehensive banking reform legislation that will increase consumer 
choice and make our financial institutions more competitive. Throughout 
the consideration of that measure, I steadfastly supported efforts to 
improve and increase credit availability to local communities. Though I 
believe we achieved this goal, I also said that we could and should do 
more. The legislation I introduce today with my colleague Senator 
Santorum does just that.
  This measure would use the extra money that is in the Bank Insurance 
Fund (BIF) and the Savings Association Insurance Fund (SAIF), money 
that banks and thrifts have paid, to pay the interest on Financing 
Corporation (FICO) bonds. As a result, banks and thrifts will be able 
to use the money they would otherwise pay to

[[Page S1811]]

FICO to increase lending in their communities. Right now, a financial 
institution of approximately $200 million in domestic deposits could 
expect to pay roughly $42,000 this year for its FICO obligation. If 
that $42,000 obligation can be paid out of our excess money in the 
insurance funds, without compromising the safety and soundness of the 
funds, it will mean that institution has $42,000 more to lend.
  Right now, the BIF and the SAIF are beyond fully capitalized. They 
both contain millions of dollars more than required by federal law. 
That excess money is sitting here in Washington. The funds keep 
growing, and the money keeps sitting here. Now, the trouble with pots 
of money sitting in Washington is that quite often, the money just 
stays here in Washington and doesn't help our communities. This 
legislation would change that. By relieving some of the financial 
burden on our banks and thrifts through this common-sense legislation, 
we will be opening up opportunities for these institutions to put that 
money to good use.
  The $42,000 saved in my example could translate into hundreds of 
thousands of dollars more in available credit. This means money 
available to help folks in eastern North Carolina rebuild their homes 
and lives after Hurricane Floyd. This means money to help revitalize 
inner-city neighborhoods. This means more money to help farmers who 
have suffered crop damage. And it means money to help more Americans 
know the joys of home ownership.
  I would like to say a few words about safety and solvency of the 
insurance funds. These funds, the BIF and SAIF, are administered by the 
FDIC and are used to pay insured depositors in the event of a bank or 
thrift failure. I am pleased to say that in these booming economic 
times, both funds are well above their statutorily required level. 
Current law requires each fund to have 1.25 percent of all insured 
deposits. Right now, the BIF and SAIF are both well above this level, 
and the funds are growing.
  In this legislation, we take great care to recognize the importance 
of protecting the insurance funds. In fact, we actually build in an 
additional cushion to help insure the solvency of the funds. Only if 
the funds are above 1.4 percent will excess money above that level be 
used to pay the FICO obligation. Moreover, we maintain the authority 
and ability of the FDIC to make necessary adjustments to the funds to 
protect their solvency, should the need arise.
  Right now, the money is sitting in an account here in Washington. I 
think it can be put to better use in local communities. This 
legislation represents a method to help do just that, without 
sacrificing the safety and soundness protections that are currently in 
place.

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