The House of Representatives approved legislation last week to protect thrifts from $3 billion in back taxes if they convert to commercial banks.

The bill forgives taxes owed on bad-debt reserves built up before 1988. Thrifts that convert to banks will be able to defer taxes for two years on reserves taken in 1988 or later if they maintain current levels of residential lending.

The bad-debt recapture would raise $1.5 billion in government revenue over seven years and was tacked on to a health insurance bill to help offset tax exemptions for nonprofit insurers of high-risk people.

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