WASHINGTON -- With the House and Senate preparing for negotiations on President Clinton's deficit-reduction package, bankers are gearing up for a fight on student lending and the tax treatment of acquired deposits.

The Senate bill, which was completed early Friday morning, is different from the House version on both issues. Negotiators from the two chambers will have to settle on identical language in the weeks to come.

The House-approved bill calls for the end of the existing guaranteed student loan program in favor of a system in which the government will lend money directly.

Market Share

The Senate bill would test direct government lending for four years, but would not permit the government's share of the market to exceed 50% unless a presidential commission agreed the system were working satisfactorily.

The compromise that appears to be shaping up would maintain most of the Senate version but set 50% as the minimum, rather than the maximum, for the fourth year, according to Karen Shaw, president of the Institute for Strategy Development in Washington.

"The House and the administration are digging in their heels on this one," said Joe Belew, president of the Consumer Bankers Association. "We'll just have to see what happens."

Also up in the air is the treatment of core deposits. The House measure would provide for the amortization of intangible assets, including core deposits, over 14 years.

The Senate agreed on the 14-year period but "carved out," or exempted, purchased mortgage servicing rights from the schedule. Instead, servicing rights would be amortized over their "real life" of seven to 10 years.

To compensate for the lost revenue from the exemption, the Senate decided to allow banks a deduction for only 75% of the value of core deposits and other intangibles.

"We'd like to try to get it back up to 100% and keep the exemption for purchased mortgage servicing rights," said Edward L. Yingling, the American Bankers Association's chief lobbyist.

Metzenbaum Blocked

The banking industry won one victory on the budget bill when Sen. Howard Metzenbaum, D-Ohio, agreed to withdraw an amendment adopted by the Finance Committee that would have permitted suits under pension laws against nonfiduciaries.

The ABA, however, argued that the measure was much broader, threatening that suits could be brought under the Employee Retirement Income Security Act against fiduciaries as well.

"The Metzenbaum amendment was carrying a lot of baggage," said Donald G. Ogilvie, the ABA'S executive vice president. "It would have hit fiduciaries and other employee plan service providers."

Risk of Lawsuits

Mr. Ogilvie said the Metzenbaum amendment would have opened the door to new and costly litigation "at a time when our courts are already overwhelmed by lawsuits."

Sen. Metzenbaum indicated that he plans to pursue the issue, however. He is expected to begin hearings later this year.

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