The federal budget deadlock could cost banks $440 million in lost deposit insurance premium rebates.

But bank trade groups are asking Congress to allow the Federal Deposit Insurance Corp. to refund premiums paid during the last half of 1995 - money they would be entitled to if not for the budget stalemate.

Their pitch may pay off. House Banking Committee Chairman Jim Leach is sympathetic and may push to amend banking portions of the budget bill to allow refunds for the second half of 1995.

"A change in the passage date should not act negatively on a rebate, which everybody agreed to in the first place," said a House Banking staffer.

As part of its plan to balance the budget by 2002, Congress voted to cap Bank Insurance Fund reserves at $1.25 per $100 of deposits. Because the insurance fund exceeds the cap now, if the bill had been enacted on schedule in 1995 the FDIC would have had to return the $440 million paid by the healthiest banks in the second half.

Because the legislation limits a bank's rebate to what it paid during the previous six months, the industry will lose the money forever if it isn't refunded now. No future refunds are likely either, because the healthiest banks stopped paying for deposit insurance on Jan. 1.

The American Bankers Association and the Independent Bankers Association of America have asked Rep. Leach, Senate Banking Committee Chairman Alfonse M. D'Amato, and other congressional leaders to consider amendments that would allow the 1995 rebates.

So far, only Rep. Leach has weighed in with support, said Karen Thomas, IBAA senior regulatory counsel. Ms. Thomas said the FDIC did not object to the 1.25% cap, and her group hopes the agency will not fight the rebates now.

FDIC officials said Friday they are reviewing the rebate dilemma.

But the battle over FDIC premiums doesn't end with 1995 rebates. Some bank lobbyists are upset that the semiannual refund to any individual institution cannot exceed the premium paid during the prior six-month period.

Because the FDIC earns investment income from the reserves, the rebate limit will lead to a surplus that lawmakers could one day divert from the insurance fund to other government programs.

"As long as the industry stays healthy, the fund will keep growing, even if no premiums are paid. It will kind of chug along, creeping up," Ms. Thomas said.

Another lobbyist said any unrefunded surplus will be a temptation to a cash-hungry Congress. "The only reason to build the fund is to offset a deficit somewhere else," he said.

Lawmakers have not indicated they are willing to remove the rebate limit.

Other crucial banking issues are hanging fire in the budget deadlock as well.

Most important is the plan to replenish the Savings Association Insurance Fund. Legislation passed by Congress called for thrifts to pay an assessment of 85 cents per $100 in deposits and for banks to assume payments on long-term bonds used to fund the 1987 thrift industry bailout on Jan. 1. Because that date is past, the bill will have to be amended.

Also, FDIC and congressional staffers are fixing loophole that will prevent more than $50 billion in deposits from escaping the assessment.

Finally, state-chartered banks and thrifts are fighting a White House plan that will force them to pay $200 million a year for federal exams.

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