WASHINGTON - The $1.5 billion tab facing banks with thrift deposits as Congress bails out the Savings Association Insurance Fund has become a focal point for many members of the congressional banking committees.
It should be no surprise that some of the most vocal supporters of the so-called Oakar banks hail from states with a plethora of them.
One of the top backers is House Banking Committee Chairman Jim Leach of Iowa, which has 53 such banks, more than any other state.
Rep. Leach was the primary backer last week of a budget bill amendment giving the Federal Deposit Insurance Corp. the authority to cut a bank's thrift deposits by one-third before levying the bailout fee.
The Oakar banks, which purchased thrift deposits after 1989 under a House amendment sponsored by Mary Rose Oakar of Ohio, argue that they are being asked to pay an unfair share of the pending thrift fund bailout. Legislation being considered in Congress would levy a one-time fee of 85 basis points on all deposits covered by the thrift fund.
Such a fee could cost the 713 Oakar banks a total of $1.5 billion. But the banks claim that 30% to 40% of the thrift deposits they acquired have left their institutions. In calculating the amount of thrift deposits held by banks, however, the FDIC assumes they have grown at the same rate as total deposits .
Senate Banking Committee Chairman Alfonse M. D'Amato sponsored an amendment that would cut by 5% the amount of banks' thrift deposits subject to the one-time levy. His home state of New York ranks among the top 10 in Oakar banks and deposits.
But Sen. D'Amato's proposal didn't go far enough for one of his fellow Republicans on the panel. Sen. Lauch Faircloth, R-N.C., pushed for a 10% reduction. North Carolina ranks sixth in Oakar deposits and Charlotte-based banking giants First Union and NationsBank hold large amounts of thrift deposits in Florida and Georgia.
Rep. Fred Heineman of North Carolina and two of his fellow Republicans on the House panel, Ohioans Bob Ney and Frank A. Cremeans, prepared amendments to provide a break to the Oakar banks, but withdrew them after soliciting a promise that relief would be discussed today when the financial institutions subcommittee meets to draft a bailout plan.
Rep. Lucille Roybal-Allard, D-Calif., also withdrew her proposal to aid banks with thrift deposits. Her state leads in Oakar deposits, with $48.7 billion.
The banks even have supporters among legislators not generally sympathetic to the industry.
Sen. Carol Moseley Braun, D-Ill., whose state has the third-highest total of Oakar institutions with 46, expressed concern about the banks' predicament when the Senate Banking Committee drafted its budget bill last week.
