Deputy Treasury Secretary Frank N. Newman said Monday that serious consideration should be given to using leftover Resolution Trust Corp. funds to capitalize the thrift insurance fund.
Speaking before the Independent Bankers Association of America's annual joint committee meeting, Mr. Newman appeared to place special emphasis on the option of using up to an estimated $13.1 billion of "leftover" funds when the RTC goes out of business in December.
"It is definitely worth very, very careful consideration," Mr. Newman said. The IBAA has suggested that this solution could speed up the capitalization of the Savings Association Insurance Fund.
The fund needs about $6.7 billion to reach its reserve target of $1.25 for every $100 of insured deposits. The IBAA also has said the funds could be used help pay SAIF's bill for the Financing Corp. bonds floated in 1987 to begin the thrift industry's rescue.
"I know you've been discussing alternative approaches yourself, including the possibility of RTC funds as a part of the solution, and we think that is a constructive suggestion and one that we're looking at very seriously," Mr. Newman told the trade group.
Kenneth A. Guenther, the IBAA's executive vice president, viewed Mr. Newman's highlighting of the RTC fund option as a good sign for his organization, which is pressing that option.
"Of course I have a bias in hearing that, but he went above and beyond, and he put it forward rather prominently as one of the options that shouldn't be ruled out," Mr. Guenther said.
The FDIC has proposed lowering insurance premiums so that the average bank will be paying 4.5 cents for every $100 of domestic deposits at yearend. The average thrift will still be paying 24 cents, and the industry is concerned that this huge difference in expenses will cost them customers and shareholders.
