WASHINGTON - in a show of bipartisan House support for comprehensive legislation to shore up the thrift insurance fund, Rep. Floyd Flake last week introduced his version of a rescue plan.
The New York Democrat's plan is similar to that of Republican Bill McCollum of Florida. Both proposals would create a single charter for thrifts and banks, and both would extend the availability of leftover Resolution Trust Corp. funds to cover thrift failures.
Each plan also aims to spread the interest tab for thrift bailout bonds between banks and thrifts.
However, while both measures include a plan to merge the Savings Association Insurance Fund with the Bank Insurance Fund, Rep. Flake wants to do it quicker: within one year of the bill's enactment.
"The most significant difference is that this bill leaves public funds at risk for the shortest amount of time of all the proposals," said an aide to Rep. Flake.
The McCollum measure, on the other hand, would allow RTC funds to cover losses until the thrift fund is rebuilt, a process that is expected to take up to four years.
Nevertheless, Rep. Flake stressed that although there are some differences between his and Rep. McCollum's bill, "we are on common ground." Both measures will be discussed at today's thrift fund hearing before House Banking's financial institutions subcommittee.
Rep. Flake's one-year merger deadline, coupled with a one-time charge to thrifts of about 85 basis points - another facet not included in the McCollum bill - brought applause from Randall McFarlane, government relations director for America's Community Banks.
"(Our members) want to get it over with - the faster, the better - and they are willing to pay a stiff price for peace of mind," said Mr. McFarlane, whose group represents thrifts.
Both bills would allow the Federal Deposit Insurance Corp. to rebate excess funds in the bank insurance fund over the 1.25% reserve ratio. Rep. Flake also would allow rebates to thrifts.
In a statement, Rep. Flake urged quick action.
"The insurance premium disparity that will exist will be an insurmountable competitive barrier if we fail to act now," he said.
