Stung by criticisms that it underestimated and responded late to the savings and loan crisis, the national press showed its intention last week not to be caught short again.

But the media may have chosen the wrong vehicle for demonstrating their mettle: a grim study estimating that Bank Insurance Fund losses could go as high as $95.5 billion.

The $220 report, "Banking on the Brink," was written by economists Roger Vaughan and Edward Hill. It is part of the Briefing Book series published by the Washington Post Co.

Newspapers and wire services dutifully reported the findings without critical balance. Television and radio followed suit, even as economists began questioning the underlying assumptions.

For example, the study assumes a writedown of banking industry real estate owned by 80% -- what one critic called "burn-down analysis."

Worst-Case Focus

Even the authors complained about the press treatment. They said new people latched onto the worst-case scenario, rather than a more reasonable projection in which the fund would lose $45.3 billion to $58.8 billion.

"Our concern wasn't the numbers," said Mr. Vaughan. "We feet the central issue is reform of deposit insurance."

Reporters were drawn to statements that 2,000 banks were in big trouble and that a taxpayer bailout was inevitable.

"The fact that the industry is doing very well this year doesn't get the play that disaster stories like this one get," said James Chesson, chief economist at the American Bankers Association. "It's unfair and it's irresponsible."

"I'm amazed that something so one-sided got so much play," said James McDermott of Keefe, Bruyette & Woods Inc.

Economist's Caveat

James Barth, an Auburn University economist who is often more bearish than regulators about the banks' condition, hadn't read the study but noted, "One has to be very wary of lumping banks together in all areas of the country."

"We're not Chicken Littles," Mr. Vaughan said Friday, after defending his book on a radio show. But he certainly stirred things up in the barnyard.

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