WASHINGTON - Rep. Bill McCollum, a rising star in the new Republican Congress, is trying to broker a compromise to cure the ailing thrift industry fund.
The Florida Republican's deal would force banks to pay part of the rescue tab. But in return, any surplus cash in the Bank Insurance Fund fund would be returned to the industry in the form of rebates.
"The centerpiece is to reinstate rebates for banks to give them as incentive," a McCollum aide explained Wednesday.
Industry lobbyist Richard F. Hohlt said the bill's odds of passage are helped by the stature of its sponsor.
"McCollum is one of the most tenacious congressmen around," he said. "He has to be taken seriously."
The McCollum bill would bring many other significant changes, including a merger of the Office of Thrift Supervision and the Office of the Comptroller of the Currency. Once both bank and thrift insurance funds were fully capitalized, they would be merged as well.
One year after a fund merger, the McCollum bill would force thrifts to convert to bank charters. Finally, Rep. McCollum is proposing that leftover Resolution Trust Corp. funds be used to cover losses from thrifts that fail over the next several years.
Rep. McCollum plans to introduce the bill today, according to his office.
The only other Savings Association Insurance Fund legislation introduced to date belongs to Rep. John J. LaFalce, D-N.Y. Last month he threw into the hopper 12 bills running the gamut of solutions proposed over the last few months.
The Treasury Department is still working on its strategy, along with the Federal Deposit Insurance Corp. and the OTS. Though details are not firm, the administration's plan clearly has three main parts.
Like Rep. McCollum, the administration would draw on RTC funds to pay for thrift failures and require banks to pay the lion's of the $780 million annual interest tab on the Financing Corp., or Fico, bonds sold in 1987 to begin the S&L bailout.
However, the administration also might raise $6.5 billion to capitalize the thrift fund through a one-time hit on thrifts.
The McCollum bill, as it stood Wednesday, did not include such a feature. That difference means thrifts would continue to pay more for deposit insurance than banks for the several years it would take for the thrift fund's reserves to hit $1.25 for every $100 of insured deposits.
However, because banks would be shouldering 75% of the Fico payment, the thrift fund would be capitalized more quickly.
In another twist, the McCollum bill would direct FDIC to pull the banks' contribution to Fico from interest earned on assets owned by the bank fund. Other proposals would tap bank premium payments.
In 1994 the bank fund's nearly $13 billion in invested assets earned $521 million - just shy of the $550 million the industry would owe under Rep. McCollum's bill.
But to bankers, using premiums or interest on bank-fund assets to pay Fico is a bad idea.
"We would still oppose it because it is using bank money," explained Edward L. Yingling, executive director of government relations at the American Bankers Association.
In return for help on Fico, Rep. McCollum is offering to restore the FDIC's authority to rebate any money accumulated in the bank fund above its mandated 1.25% reserve ratio.
The FDIC in January proposed cutting bank premiums 83% to an average 4.5 cents in the third quarter. Thrift premiums would remain at 23 cents.
