CBA Publications >> Members' Only Publications >> Advocacy Alert

Advocacy Alert- 011/11/2002

GOP Scores unexpected gains in Senate and increase House margin

Winning nearly all the toss-up races, and even a few that were not expected to be close, the Republicans took back control of the Senate in the midterm election this week, and added to their slim majority in the House. Of all endangered Democrats, only Tim Johnson of South Dakota apparently survived - and at that, by less than 600 votes -- making a recount a certainty.

In California the election went exactly as predicted. There was not a single upset in 53 House races in the state. Republicans maintained the 20 seats with which they went into the election, while Democrats captured the new seat that was added by reapportionment. It was exactly what those who drew up the new districts had in mind - a deal to which both parties agreed. Incumbents won every race in which an incumbent was on the ballot. Newcomer Dennis Cardoza took the seat vacated by Rep. Gary Condit. Democrat Linda Sanchez won the seat vacated by Republican Steve Horn, but the Republicans held their 20th seat when Devon Nunes won the new 21st District.

There is some speculation that House Minority Leader Richard Gephardt may step down which would make minority whip Nancy Pelosi an obvious candidate for the top Democratic slot. Otherwise, Californians Bill Thomas and David Dreier will retain their chairs on the Ways and Means and Rules committees respectively.

One significant change will be at the top of the Senate Banking Committee where Alabama Republican Richard Shelby will become chairman. Shelby succeeds Maryland Democrat Paul Sarbanes as chairman, but he also succeeds Sen. Phil Gramm who has retired. Less ideological than Gramm, Shelby favors enactment of a strong privacy bill. Still, he will need to clear his legislation with the rest of his GOP colleagues. Shelby has not been particularly outspoken about deposit insurance reform, though he has made clear he does not support an increase in the deposit insurance ceiling. Shelby was a supporter of the realtor bill that would overturn a proposed regulation to allow national banks and holding companies to engage in real estate brokerage and management.

Bankruptcy and terrorism insurance likely in lame duck session

Until the Congress returns next week, and the Senate organizes itself (new Missouri Republican Jim Talent will be seated immediately as will the new independent appointed by Minnesota Governor, Jesse Ventura, the agenda for the lame duck session will not become clear. Still, there were strong indications that both bankruptcy and terrorism insurance bills would be passed, probably next week. Homeland security is another issue which could be resolved, but the GOP might prefer to wait until January when it will have sufficient majorities to overcome Democratic demands to allow employees of the new department to unionize.

FDIC meets next week to decide on 2003 BIF premium; ratio likely to be 1.25%

The FDIC board will meet next Tuesday, November 12 to decide whether to levy a BIF premium assessment in the first half of 2003. The only safe prediction is that if an assessment is levied, it will be very small, possibly even less than 1 basis point. Despite a law which says FDIC may not assess premiums if the ratio exceeds 1.25%, the Corporation's board has great leeway. FDIC has released third quarter financial information indicating that the BIF grew by $200 million during the quarter. This is less than half the growth experienced by the fund in the second quarter. The corporation added $250 million to its general reserve and also added a small reserve for "contingent legal claims." Some of these charges were offset by gains in its "available for sale" assets owing to continuing reductions in interest rates. The $200 million coupled with the slight excess over 1.25% in the Fund as of the end of the second quarter would allow for growth in insured deposits of $28 billion - which just happens to be the average quarterly growth over the past 10 years. The board is also permitted to make judgments about both insured deposit growth and the likelihood of claims arising in the future.