WASHINGTON - The banking industry's anxiously awaited deposit insurance rate cut could be delayed if thrifts succeed in moving funds into the Bank Insurance Fund.

That threat became more urgent Thursday as the nation's largest thrift, H.F. Ahmanson & Co.'s Home Savings of America, disclosed plans to charter a savings bank insured by the bank fund in order to shift funds out of the Savings Association Insurance Fund.

As the bank fund gains deposits, the amount of reserves needed before premiums may be lowered increases. By law, the bank fund must have $1.25 for every $100 of insured deposits before the FDIC can lower premiums.

"It would knock the BIF fund back below 1.25%," said L. William Seidman, who was Federal Deposit Insurance Corp. chairman from 1985-91. "This is big news. This is going to stir the bankers up like nothing you've ever seen."

The thrift fund currently insures about $700 billion while the bank fund covers about $1.89 trillion. The bank fund needs another $23.6 billion to reach the 1.25% target. If thrifts succeed in moving over just a quarter of their fund's deposits, the bank fund would need $2.2 billion more in reserves, according to industry analyst Bert Ely.

If this trend really catches fire and half of the thrift fund's deposits are moved over, then the bank fund would need $4.4 billion more.

"For every $100 that shifts, the BIF automatically needs another $1.25," said Mr. Ely, who said it would take eight to 10 months of premiums to pay for a $4.4 billion increase in reserves.

The FDIC on Jan. 31 proposed slashing bank premiums by 83% - to 4 cents per $100 of domestic deposits. The same day, the agency announced that it plans to keep thrift premiums at 24 cents because the thrift fund is not expected to recapitalize until 2002.

To escape the coming high cost of deposit insurance, the country's biggest thrifts are applying to charter new institutions that would be insured by the bank fund.

Los Angeles-based Great Western, the second-largest thrift, opened the door to deposit shifts by applying for a national bank charter on March 1. Other institutions are weighing their options, looking for the best way to avoid paying six times more for insurance than banks.

If the applications are approved - and regulators have said they will be - thrifts will lure depositors to their new banks with higher interest rates.

Charles R. Rinehart, Home Savings' chairman and chief executive of both Ahmanson and Home Savings, predicted in an interview that up to 60% of the Irwindale, Calif., company's $36 billion in thrift deposits could be shifted to the bank fund within six to nine months.

"Moving deposits out of SAIF into BIF and not bringing any reserves with them jeopardizes the 1.25," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America. "This strategy is a de facto merger of the funds."

Mr. Rinehart agreed.

"We're going to merge the funds one institution at a time," he said, adding: "We may leave the $2.3 billion in SAIF behind, and that's in no one's interest."

While the banking industry has always opposed a merger of the bank and thrift insurance funds, this sort of de facto merger would be even worse because none of the thrift fund's reserves would be transferred.

James A. Chessen, chief economist at the American Bankers Association, said he thinks the rate cut will occur before enough thrift deposits are transferred to the bank fund to affect the 1.25% ratio.

"I think the question is, when can they actually get through the regulatory hoops and how quickly could they move that money?" he said.

While regulators expect to approve the new charter applications, the process could take months. Meanwhile, the FDIC has said it will not begin charging the new, lower rate until the fourth quarter.

Still, Mr. Chessen asked: "Do they (thrifts) owe something to the BIF fund as they enter with new deposits?

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