BANKER UPDATE: MEMORABLE BLASTS
Despite the fact that the Congress was in recess for Memorial Day and President Bush was traveling in Europe and Russia, hot humid air swept into Washington this week. The warm front was accompanied by a battle of press releases as the deposit insurance reform debate moved to the Senate.
Senator Phil Gramm (R-TX) wasn't satisfied with the report that the Congressional Budget Office (CBO) had provided to House Financial Services Committee Chairman Oxley and asked for his own report. Using the new report, Gramm issued a press release that was promptly answered by Senator Tim Johnson (D-South Dakota), chairman of the Financial Institutions subcommittee. Chairman Johnson is playing the leadership role in moving comprehensive and balanced deposit insurance reform through the Senate. The ICBA strongly supports his bill, S. 1945.
In our impartial judgment, the hot air award of this Memorial Day week goes to Senator Gramm.
Battle of the Press Releases
Senator Gramm: "Higher coverage limits would provide little benefit to depositors. According to the report, an increase would help only 1% of depositors, those with accounts that exceed the current ceiling. The CBO study reveals that few Americans today take advantage of existing deposit insurance limits: the median checking account balance is about $3,100 and the median certificate of deposit (CD) account is $15,000. The CBO analysis shows that this legislation would benefit no one other than a very narrow segment of wealthy Americans. Congress should be very reluctant to fill a need that does not exist." May 29, 2002.
Chairman Johnson: "I am disappointed that Senator Gramm has taken the Safety Act out of context and drawn misleading conclusions about the impact of an insurance coverage increase on taxpayers. This bill actually reduces risk to taxpayers by introducing true risk-based pricing at the same time coverage is adjusted for the first time in over 20 years. I would urge Senator Gramm to sit down and talk with some of the uninsured depositors who lost their life savings in the failure of Superior Bank, and reconsider his comment that retirees with $250,000 are wealthy." May 29, 2002.