WASHINGTON - Pressing its case for deposit insurance premiums cuts, the American Bankers Association rebutted the concerns of a key government official in a 13-page paper late last month.

The ABA outlined its position in a letter to Federal Deposit Insurance Corp. Chairman Ricki R. Tigert, who told a group of ABA leaders in early December that she is worried about reducing bank deposit premiums too far, too fast.

She also endorsed building a cushion, or a small extra reserve, in the Bank Insurance Fund. That could mean rates would not be reduced when the fund reaches its congressionally-mandated 1.25% target. The bank fund must hold $1.25 for every $100 of insured deposits before the FDIC may bring rates down.

In her speech to the ABA, Ms. Tigert listed a number of other "complexities" that she said should be considered before premiums are lowered.

Edward L. Yingling, ABA's executive director of government relations, said in the Dec. 20 letter that the trade group has been grappling with the same issues. For expert help, the association hired Bob Barnett, a former FDIC chairman, to study the laws governing deposit insurance.

Forwarding Mr. Barnett's conclusions to Ms. Tigert late last month, the ABA said:

*Premiums should be set so that the bank fund hits the 1.25% level, but does not go above the target.

*The FDIC has the authority to lower premiums before the 1.25% target is actually hit.

*The agency can and should rebate assessment income that exceeds the amount needed to maintain the 1.25% level.

*Decisions regarding bank premiums must be made without regard to the rates thrifts pay for insurance or the condition of the Savings Association Insurance Fund.

In an interview Friday, Ms. Tigert made it clear the FDIC has not made any final decisions. The agency will be releasing a proposal on future premiums in late January, she noted.

"We agree that premiums should be lowered; now we have to research how much and how," she said.

Asked about the ABA's conclusion that premiums could be lowered before the fund reaches 1.25%, she said: "That's not the way we read the law, but we'll be getting comments on that as well."

Ms. Tigert favors building a reserve above 1.25% to guard against fluctuations in the premium from year to year. The law requires FDIC to keep the fund at 1.25%. If the fund falls below that target and is not rebuilt within a year, the FDIC must raise premiums to get the fund back to 1.25%.

In his letter, Mr. Yingling said the trade group's government relations council unanimously voted against creating such a reserve.

"The council did not believe that the amount of fluctuation in the premium was significant enough to justify the cost to the industry," Mr. Yingling wrote.

In fact, the way ABA sees it, the FDIC may lower premiums even before the 1.25% is reached as long as the agency projects premium income will bring the fund to the designated level. Mr. Yingling said this is a way to achieve a "soft landing."

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