WASHINGTON - Shifting its position on a key issue, the thrift industry's main trade group wants its members to pay $6.1 billion this year to capitalize the Savings Association Insurance Fund.
While the idea has been floating for weeks, this is the first time America's Community Bankers has called for rapidly building the fund with a one-time hit on thrifts.
The trade group had been backing a slower capitalization schedule and insisting that thrifts pay no more than 5 cents above Bank Insurance Fund rates.
"ACB's board of directors believes that resolving the BIF/SAIF issue now - doing it once and doing it right - is in the best interests of our business and our customers," according to a June 29 letter sent to ACB members.
In tandem with this huge cash contribution, however, the group is reiterating its demand that the two insurance funds be merged.
"It can not be emphasized too strongly that the rapid recapitalization of SAIF is viewed as removing all rational objections to the creation of a single, strong deposit insurance fund," the letter states.
The group's president, Paul A. Schosberg, said in an interview Monday, "If you are going to put that kind of money on the table, you have a right to say here are all the ingredients to the problem and here's how they ought to be addressed."
The letter to members explains that the $6.1 billion total breaks down to 85 basis points a thrift, which would be tax deductible but would have to be expensed right away.
Another condition to thrifts' ponying up this money, the letter said, is that banks pay a pro rata share of the annual interest payments due on the Financing Corp. bonds.
Shouldering banks with 75% of the $780 million yearly Fico tab also is reportedly in the Clinton administration's plan to rescue the thrift fund.
Finally, leftover Resolution Trust Corp. funds should be used to pay off failed thrifts, ACB told its members. Jogging this money free, however, would be politically tough, the letter noted.
America's Community Bankers has decided to put off for now some related, but less immediate, concerns, such as merging bank and thrift charters or combining the bank and thrift regulatory agencies.
Because time is growing short for Congress to enact legislation this year, Mr. Schosberg said, ACB is concentrating on shoring up the thrift fund, spreading Fico payments, and merging the insurance funds.
"The more you put on the table, the more complex it becomes and the more drawn out the process would be," he said.
