The House Banking Committee sounded the death knell for the nation's thrifts this week, but its Senate counterpart may have thrown the industry a lifeline.

The lifeline came from Sen. Bill Frist, R-Tenn., who crafted an amendment that calls for a merger of the bank and thrift insurance funds - but only if Congress first agrees to combine the two industry charters.

In one sense, the amendment moves the Senate a big step closer to the House Banking Committee's position. The House panel takes what Chairman Jim Leach calls "the galactic approach" and deals with three major issues at once: capitalizing the thrift insurance fund, merging it with the agency that backs bank deposits, and absorbing the nation's savings institutions into the commercial banking industry.

The Frist amendment doesn't go that far, but it contemplates a merger of the two industries. As a result, some observers believe that when House and Senate negotiators get around to hard bargaining, they will split the difference and end up with a bill very close to the House measure.

That would be an important victory for the banking industry, which is being called upon to pay a big part of the bill for fixing the thrift fund. In return, bankers would like to rid themselves of a source of competition that they believe has extra powers and therefore an unfair competitive advantage.

But some in the thrift business see a different scenario, one in which the Senate Banking Committee's tenacious chairman, Alfonse M. D'Amato, walks away from the bargaining table with the Senate position pretty much intact.

In that case, the Frist amendment gives the thrift industry a new lease on life - an opportunity to bargain for its future in an atmosphere vastly more hospitable than the current environment.

That's because Sen. Frist separates the financial issues from the charter question, a distinction of no small importance.

For thrifts, nothing is more crucial than premium parity - except, perhaps, getting the banking industry to help pay for premium parity. Both the House and Senate bills create a mechanism for capitalizing the thrift fund with significant contributions from banks. Once their fund is fully capitalized, thrifts' premiums should drop to the same level as the bank levy.

Thrifts need that legislation, and they need it bad. To get it, they would probably give up everything they have, including their charter. The last thing thrift lobbyists want, therefore, is to negotiate their future in the context of a funding bill.

In the long run, it's almost inconceivable that the federal thrift charter will survive. The Office of Thrift Supervision and the Office of the Comptroller of the Currency are being set up for an arranged marriage and the institutions regulated by the two will all eventually become national banks.

But there are three other kinds of savings institutions, all of which have some chance of survival. The first is unitary thrift holding companies, a peculiar breed that is not bound by the ownership restrictions that prevent banks and nonbanks from merging.

The House bill provides a limited exemption for the unitaries, preserving their special powers but forbidding expansion. Sen. D'Amato would likely want to cut the unitaries more slack.

The other two types of thrifts are state-chartered savings and loans and state-chartered savings banks. While the state-chartered institutions have few powers that banks do not - limited real estate investment authority is one - many thrift executives believe deeply that they are in a different business from commercial banks and that the distinction should be maintained.

The Frist amendment gives them that chance. Once the funding issue is solved, who's to say what Congress will finally do about merging the funds and the charters? And once the insurance fund is fixed, the pressure to restructure the industry is gone.

It's entirely possible that three years from now, the thrift industry will be alive and well, with a newly capitalized insurance fund and the charter they have grown to love.

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