this week to rescue the Savings Association Insurance Fund, and pledged to deal with more complicated issues such as merging the bank and thrift industries by April. House Banking Committee Chairman Jim Leach made his support for the narrow financial fix contingent upon a commitment by his Senate counterpart, Alfonse M. D'Amato, to move quickly on separate legislation to convert thrifts into commercial banks. Sen. D'Amato agreed Wednesday to introduce legislation this week mirroring a bill in the House that would eliminate the thrift charter and merge the bank and thrift insurance funds. The New York Republican also agreed to hold hearings on the issue before yearend, and vote on it by Easter. "I have committed to making sure elimination of the thrift charter is the Senate Banking Committee's highest priority," said Sen. D'Amato. Edward L. Yingling, chief lobbyist for the American Bankers Association, said bankers should be pleased with the Senate's commitment to link a merger of the insurance funds to the charter conversion. "That was critical to us, though our preference would be to go ahead and do the whole thing now," he said. Paul Schosberg, president of America's Community Bankers, was satisfied. "We think that the timetable is a reasonable one," Mr. Schosberg said. "The final piece, which is absolutely critical for our members, is a date certain for a fund merger." The Treasury Department, which has pushed a two-step process from the start, also was pleased. "They've avoided getting bogged down in other matters that could be controversial," Richard S. Carnell, assistant Treasury secretary, said Thursday. "We're very encouraged by the progress." Lawmakers have bundled the thrift fund rescue into a broader budget bill, a final version of which representatives from the House and Senate banking committee began negotiating Wednesday. In the conference committee, Rep. Leach pushed hard for his "galactic approach," which would replenish the thrift fund, but also merge it with the bank insurance fund and force thrifts to convert to bank charters. Rep. Leach argued Wednesday that the banking industry could be damaged if the charter issues are not settled quickly. "The financial landscape is going to be shifting quickly. We must provide certitude on charter issues," he said. Many bankers are angry that the thrift fund rescue dumps $12 billion in long-term bond payments on the industry. "A lot of bankers are not happy with the financial nature of the fix," said Kenneth Guenther, executive vice president of the Independent Bankers of America. The compromise calls for banks to assume 75% of the $800 million due each year on Financing Corp. bonds, which were floated in 1987 to bail out the thrift industry. A one-time fee of 85 basis points will be levied Jan. 1 on all thrift deposits. The assessment would capitalize the Savings Association Insurance Fund, giving it $1.25 for every $100 in insured deposits. Once the fund is at full strength, thrift premiums could be lowered to the rate banks pay. Rep. Leach had threatened to yank the thrift fund issue from the budget bill if the Senate did not accept his comprehensive approach. But the Iowa Republican lost leverage this week when House Speaker Newt Gingrich ordered the banking committees to find $4.8 billion in budget savings, or twice the original target. Consequently, Rep. Leach could not afford to lose the $900 million, seven-year savings generated by the rescue. Though Sen. D'Amato praised the House panel's effort to deal with the complexities of converting the thrift charter, he said his committee has not sufficiently examined the issue. "We should have a practical opportunity to examine the issues," he said. "I cannot go further than that in good conscience." Among the problems that must be resolved include special powers granted to thrifts and unitary thrift holding companies. That Sen. D'Amato and Rep. Leach were able to compromise in a matter of hours demonstrates that the two committee leaders can cooperate and usher banking legislation through Congress, Mr. Guenther said. "It's a good sign they can work together. But whether that's good for banking is another thing," he said. Staffs of both committees continued negotiations Thursday to iron out other details. Among the major topics: reductions in the one-time assessment for banks with thrift deposits, and a House proposal to cap premiums when the deposit insurance fund reaches $1.25 per $100 in deposits. House provisions loosening Community Reinvestment Act rules are likely to be eliminated because of the Senate's so-called Byrd rule, which blocks policy issues from being included in budget bills.
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