Statement of Administration Policy: S. 419 - Resolution Trust Corporation Funding Act of 1991

(House)
(Riegle (D) Michigan)

The Administration strongly supports enactment of S. 419 as proposed to be amended by Representative Gonzalez. The Resolution Trust Corporation (RTC) has exhausted the initial funding from the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Without additional funding now, the RTC will cease resolving insolvent thrifts. The cost of delay to the taxpayers will be substantial.

Scoring for Purposes of Pay-As-You-Go and Caps

Title I makes available to the RTC $30 billion for the funding of existing deposit insurance guarantees. This amount was included in the baseline in the President's FY 1992 Budget. Accordingly, enactment of Title I would not increase projected deficits. Pursuant to Section 13101 of the Omnibus Budget Reconciliation Act of 1990 (OBRA), pay-as-you-go requirements do not apply to Title 1.

Expansion of the Affordable Housing Program would increase direct spending which is outside the scope of deposit insurance. It is subject to the pay-as-you-go requirement of OBRA because OBRA provides that only the full funding of deposit insurance guarantees is exempt from the pay-as-you-go requirement.

No offsets to the direct spending increases are provided in the bill. Because the bill is not fully offset, a budget point of order would apply in the Senate. If, contrary to the Administration's recommendation, the Senate waives the point of order, enactment of the Gonzalez amendment would add to the end of year pay-as-you-go requirement, which must be met to avoid sequester.

OMB's preliminary scoring estimate for the Gonzalez amendment is that it would increase FY 1991 outlays by an estimated $4 million. Final scoring of this legislation may deviate from this estimate. If the Gonzalez amendment were enacted, final OMB scoring estimates would be published five days after enactment, as required under OBRA. The cumulative effect of all enacted legislation on the pay-as-you-go requirement will be issued in monthly reports transmitted to Congress.