Lawmaker Says Banks Won't Escape Paying Part of Thrift Fund Tab

PALM BEACH, Fla. - Congress will not let banks that bought thrift deposits escape a proposed one-time assessment to recapitalize the Savings Association Insurance Fund, Rep. Bill McCollum predicted Monday.

The so-called Oakar banks have been arguing that their tab for the thrift fund rescue should be reduced because the deposits they acquired have run off. (See related story this page.)

But the Florida Republican told a meeting of the Pennsylvania Association of Community Bankers, "I don't think the Treasury Department wants a deal on the Oakar institutions from what I've heard in the past week."

Rep. McCollum said he and his staff have been working closely with Treasury officials to finalize a legislative proposal to rebuild the struggling thrift fund.

The current plan would levy a one-time assessment on thrift deposits, about 85 cents on every $100 of deposits. It would also force commercial banks to pay about 75% of the interest due each year on the Financing Corp. bonds, floated in 1987 to begin the first thrift bailout.

Once the fund is recapitalized, it would be quickly merged with the Bank Insurance Fund, paving the way for a merger of the two charters within a few years, Rep. McCollum said.

"We're moving with a great deal of alacrity," Rep. McCollum said. "I think we've got a chance to put together something that's not that controversial and most industry group participants will generally embrace."

In fact, over the weekend the Pennsylvania association's board unanimously endorsed a merger of the bank and thrift insurance funds as well as the creation of a single charter.

The association's vote is important because it is the largest of nine state trade groups that represent both banks and thrifts. The association has 270 member institutions divided almost equally between banks and thrifts.

"It's very significant," Rep. McCollum said. "It shows that this is not something from one side of the group or another. Both said that that's what they wanted. It's good for both industries."

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