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Author: McConnell, BillAnason, Dean

WASHINGTON - Reps. Howard "Buck" McKeon, R-Calif., and Dale Kildee, D-Mich., on Friday offered to pump $300 million into government-guaranteed student loans over five years to ensure that private lenders stay in the program.

Their plan is intended to settle disputes over a new interest rate formula that takes effect this summer.

Under their plan, students would continue to receive a cut in their five-year average interest rate to 7% from 7.8%. To partially compensate lenders, the government would supplement interest payments to ensure that lenders receive a rate of 7.5%.

But Joe Belew, president of the Consumer Bankers Association, said the proposed rate is still too low. "It is difficult to find any bankers who think this is good news," he said.

Staffers for the lawmakers said the House Education and Workforce Committee will vote on the proposal Wednesday.

WASHINGTON - The Federal Reserve Board issued an interim rule Friday that would let banks deliver account statements and other mandatory disclosures electronically if the consumer agrees.

The interim rule, which goes into effect March 20, would not require financial institutions to provide paper copies of the disclosures. Separately, as part of an effort to revise rules for interbank check clearing, the Federal Reserve Board is considering a later deadline for checks that must receive same-day settlement.

Last week the Fed asked for comment on current rules, promulgated in 1994, which require depository institutions to make same-day settle payments on checks that are received by 8 a.m. from private-sector institutions. The agency is considering a later deadline to eliminate the advantage held by Federal Reserve banks, which are entitled to receive same-day settlement on checks they present by 2 p.m. The Fed is also reviewing whether the later deadline should be permitted only for checks that are electronically transmitted and whether banks have set proper delivery requirements on institutions that seek same-day settlement.

WASHINGTON - Democrats will not support the financial reform bill crafted by Republican leaders, the House Banking Committee's top Democrat said Friday. "I have long supported the goal of financial modernization," said Rep. John J. LaFalce, D-N.Y., but "this proposal does not take us where we need to go."

The bill-which the House Banking and Commerce committees released last week-would hurt banks and thrifts because it weakens the thrift charter and diminishes the value of the national bank charter, he said in a statement.

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