Capital Briefs: Budget Crisis Seen Undermining Thrift Fund

A drawn-out federal budget deadlock could throw the thrift deposit insurance fund into a "death spiral," an industry advisory panel said.

"Delay well into 1996 will be a serious gamble of taxpayer funds," the Savings Association Insurance Fund Industry Advisory Committee argued in its December report to Congress.

The House and Senate have agreed on a rescue plan for the undercapitalized savings insurance fund. But the legislation is part of the seven-year budget reconciliation bill that Congress and President Clinton have been fighting over for weeks.

As a result, 1996 has started with thrifts paying 24 basis points more for deposit insurance than banks, whose insurance fund has more reserves than the law requires.

"Substantial rate disparity, which the (advisory committee) has predicted since mid-1993, now is a reality," the committee said. "The only comprehensive solution to assure against an unanticipated insolvency of the SAIF is a merger of the BIF and the SAIF," the panel concluded.

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