The battle over the budget may be a matter of presidential politics, but the day-to-day concerns of the banking industry are caught in the middle.

On one hand, this week's news that a balanced-budget bill could be delayed until after the November election should cheer the industry. That's because the bill would require banks to pay as much as $600 million a year to help finance the thrift bailout.

"It's a gift to the banking industry," said one congressional aide closely involved with the legislation. Even if banks eventually end up paying for the Financing Corp., or Fico, bonds that were sold to shore up the thrift insurance fund, the total tab gets smaller with the passage of time, he said.

Moreover, the banking committee is unlikely to move the Fico provision separately from the budget. It's part of a provision that raises money to capitalize the Savings Association Insurance Fund, and that money counts for budget-balancing purposes.

If it were moved separately, the committee would have to come up with other cuts to achieve its share of the budget savings.

But the fact is that the budget stalemate is, at best, a mixed blessing for the banking industry. Sooner or later - probably sooner - the White House and Congress will agree on a budget bill and most bank lobbyists are resigned to the prospect of paying for Fico eventually.

In addition, the budget bill provides long-sought relief on trust fund conversions, Individual Retirement Accounts, and capital gains taxes that financial institutions have been seeking for years.

"It's mixed news for banks," said Edward L. Yingling, top lobbyist for the American Bankers Association. "Fico is the big negative, but there are a lot of very positive things in that bill for banks."

Kenneth A. Guenther, head of the Independent Bankers Association of America, doesn't think the blessing is so mixed. The budget bill is overwhelmingly positive for the industry, he said, even with the levy for the Fico bonds.

Mr. Guenther is particularly concerned about provisions that would liberalize individual and small-business exemptions from estate taxes. The current $600,000 exemption would be raised to $750,000, and up to $2.5 million of the value of small businesses would be at least partially sheltered from taxes.

The beneficiaries of those provisions are community bank customers, Mr. Guenther said, and the trust departments that serve them.

Some lobbyists are arguing that the Fico provision is going to pass eventually: The big question is whether banks get the tax provisions added as sweetners.

But the Fico provision isn't going to be cut free from the budget bill. If it were, it would be subject to amendments on the Senate floor, and the banking industry has enough political muscle to at least pare down the cost of the Fico provision.

That argues in favor of keeping the provision bound up tightly in the protective embrace of the budget bill. And while bankers will grouse from now until the end of time about the unfairness of the Fico payment, the hard feelings will be at least partly softened by the tax breaks contained in the bill.

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