This is not a taxpayer-funded bailout. It assesses the member institutions, the savings and loans, to generate a cash flow to service the debt that will be incurred by the thrift industry. It will not artificially prop up thrifts that are not viable. Current law hinders farmers from renegotiating loans by requiring them to recognize the losses all at once. Loan loss amortization has the potential to help both banks and farmers by alleviating some of the pressure on the small agricultural lending institutions.
Amortization also creates incentives for banks to restructure loans.
This bill allows qualified agricultural banks to amortize their loan losses over a 7-year period. The bill also extends and expands the federal regulators' authority to arrange emergency interstate acquisitions of failing institutions. This will enable the regulators to deal with financially distressed institutions in the most effective and orderly fashion. More importantly, it will ensure absolute protection for deposits and full confidence in the financial marketplace. This provision is crucial since it restores competitive equity to the nation's banking system by bringing within the parameters of federal law those entities that are banks in nearly every regard except they are not bank holding companies.