The Western League of Savings Institutions, a California trade group that represents some of the nation’s largest thrifts, is mulling a merger with the California Bankers Association.

Rick McGill, vice chairman of the Western League, confirmed that the two groups are in discussions and should have an agreement “within a couple of months, tops.” He said it makes sense to merge because most of the issues that have historically divided banks and thrifts have gone away.

The merger would join two of the more powerful state banking groups in the country. The Western League has just 31 members, but some of them are among the most prominent players in the nation’s thrift industry. Its members include Washington Mutual Bank FA, a unit of $229 billion- asset Washington Mutual Inc. of Seattle; $62 billion-asset California Federal Bank of San Francisco; and $56 billion-asset World Savings Bank of Oakland.

The California bankers group and the Western League would not be the first bank and thrift trade associations to merge. In recent years such groups have combined in North Carolina, Florida, Indiana, Tennessee, and Oregon, and this month the Community Bank League of New England, a Massachusetts thrift group with 101 members, merged with the Massachusetts Bankers Association.

The enactment of the Gramm-Leach-Bliley Act in 1999 defused one of the more divisive issues — the ability of commercial companies to apply for permission to start or buy a single, or “unitary,” thrift.

Banks had long opposed the unitary thrift charter, while thrifts supported it. Now only those commercial companies that met a May 4, 1999, application deadline may own thrifts. This reduced the threat to financial institutions from retail giants such as Wal-Mart, which missed the deadline.

That and other provisions of Gramm-Leach-Bliley helped level the playing field between thrifts and banks, said Mr. McGill, who is also president of $1.3 billion-asset Quaker City Federal Savings Bank in Whittier.

“We have far more in common than we have differences,” he said.

Gary Gertz, the president and chief executive officer of the California bankers group, agreed with Mr. McGill about the common ground between banks and thrifts.

“We are very much together in our points of view regarding privacy issues, FDIC insurance reform, and predatory lending,” among other issues, Mr. Gertz said. “When we bring different segments of the financial services community together, it provides for a common voice, which in turn allows us to increase our effectiveness at both the national level as well as within the California State Legislature.”

A combined group would most likely retain its affiliation with America’s Community Bankers, the national thrift trade group, as well as with the American Bankers Association, Mr. McGill and Mr. Gertz said.

Diane Casey, the president and CEO at America’s Community Bankers, said that retaining the dual affiliations would help the combined group understand the priorities of all of its members.

But other observers, who asked not to be identified, said that the merger of the California associations would be a big loss for her group.

Though banks and thrifts see eye-to-eye on more issues these days, Ms. Casey said that America’s Community Bankers and the American Bankers Association should remain separate entities. The two national groups held talks in 1999 but suspended negotiations after many thrifts voiced opposition to a merger.

“There still are a variety of charters,” which spark different concerns, she said. “Sometimes there are differences of opinion, so it’s important to stand separately to make sure our members’ views are clearly heard.”

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