At 6-foot-7, Jonathan Fiechter may be Washington's tallest regulator. He may also have this city's biggest problem.

Come Tuesday, he will sit with other directors of the Federal Deposit Insurance Corp. and consider a detailed plan to lower bank insurance premiums. Unlike the others, he will be voting with the sure knowledge that his action will inflict pain upon his own constituency - the nation's savings and loans.

"There's a clear tension, given the various hats I wear," conceedes Mr. Fiechter, who is acting director of the Office of Thrift Supervision as well as a member of the FDIC board.

Many in the thrift industry would like Mr. Fiechter to argue in favor of parity. Either thrift premiums should come down or the rates charged to banks should remain high, they say.

But the regulator isn't buying. "I don't think that damaging the competitiveness of the banking industry is the appropriate solution to the thrift crisis," he said.

What is the appropriate solution then? Mr. Fiechter isn't saying.

"I have an obligation to explain that this is an economic problem that requires a political solution," he said. But it is the role of Congress and the industry's trade groups to decide just what that solution should be, he added.

"I'm not certain I will take a position on how Jim Leach should solve the problem," he said, referring to the Iowa Republican who heads the House Banking Committee.

The problem faced by thrifts is almost overwhelming. Bank insurance premiums could drop this year to as little as 5 cents for each $100 of insured deposits on average, while thrift premiums will remain stuck at 24 cents until well into the next century.


That's a competitive disadvantage of no small consequence. It can be seen most readily, Mr. Fiechter said, in the fact that virtually no one from outside the industry has tried to charter a new thrift since the 1989 bailout forced premiums to their current level.

The big stumbling block is the "Fico bonds," the Financing Corp. obligations issued as part of the 1987 effort to recapitalize the thrift insurance fund. That effort fell far short, but the bonds continue to haunt the industry, sucking up more than 40% of thrifts' premium dollars.

Mr. Fiechter wants Congress to find a way to lift that burden from the thrift industry - options include using money left over from the thrift bailout - but that doesn't appear to be in the cards right now.

Although the thrift industry has come a long way from the stormy days of the late 1980s, when its lobbyists were persona non grata on Capitol Hill, the it lost considerable ground in the last election.

Last year, Rep. Leach's predecessor, Democratic Rep. Henry B. Gonzalez, had designated thrift premiums as 1995's top priority. The Treasury Department was also focused on the issue and Sen. Alfonse M. D'Amato, the Senate Banking Committee's ranking Republican, was known to be concerned.

However, the elections distracted the Clinton administration and elevated Rep. Leach, who in 1993 had set nearly insurmountable barriers to the use of tax dollars by thrifts.

Sen. D'Amato, now chairman of the Senate panel, still "wants to be a player, but he doesn't want to be out there on his own," said one industry lobbyist familiar with the situation.

But Mr. Fiechter says lawmakers should understand the magnitude of the crisis and their own culpability. The 1989 bailout law, he said, was based on a premise and a promise that have not been fulfilled.


First, policymakers assumed thrift deposits would increase at 7% a year, providing the insurance fund with a building revenue stream. Instead, insured deposits have fallen dramatically.

Second, Congress had pledged to make up the shortfall if premium dollars fell below $2 billion. Instead, Congress decided last year that it would not pay a penny into the fund except under the most dire circumstances imaginable.

Mr. Fiechter said he is making those points to any legislator willing to listen.

"I need to convince members of Congress that is is good public policy to address the situation over the near term, rather than wait for a crisis," he said.

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