A bill to expand the Federal Deposit Insurance Corporation's (FDIC) credit line and protect mortgage issuers from lawsuits won overwhelming approval in the U.S. Senate on Wednesday.
The measure, which passed on a vote of 91 to 5, would increase the FDIC's line of credit with the Treasury Department to $100 million from the current ceiling of $30 billion. The higher credit line would be available if the FDIC's reserves are insufficient to deal with the wave of bank failures.
Mortgage companies would also be protected from investor lawsuits if those companies relax their monthly payment requirements for troubled homeowners.
A similar bill was previously approved by the House of Representatives, with the differences now subject to negotiation in a conference committee.
The high volume of bank failures in the past two years has sent the FDIC's insurance reserve fund lower. The new measure is aimed at resolving the funding issue without requiring the agency to charge higher premiums to banks to replenish the fund.
The measure also would give mortgage servicing companies, which collect loan payments, greater flexibility to modify loans to financially troubled homebuyers.
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