WASHINGTON - The House Banking Committee's second-ranking Democrat said the Bank Insurance Fund should be required to hold an extra 25 cents for each $100 of insured deposits - a step that would delay the premium rate reduction.

"While I don't believe that one approach is vastly superior to all the others, a serious case can be made for raising the standard for both insurance funds from 1.25% to 1.5%," said Rep. John J. LaFalce, D-N.Y., at a hearing Friday.

Though Rep. LaFalce is in the minority party, his suggestion could increase pressure on the banking industry to pony up some money for the Savings Association Insurance Fund.

In particular, thrift industry leaders would like for banks to share responsibility for the Financing Corp., or Fico bonds, that were authorized in 1987 to shore up the industry's flagging insurance fund.

Bank industry leaders took sharp exception to Rep. LaFalce's proposal, arguing that any hike in the required level of reserves would violate an agreement worked out with Congress in 1991 to set the required reserve level at $1.25 for each $100 of domestic deposits.

"The banking industry would be outraged by an attempt to do that," said Edward L. Yingling, chief lobbyist for the American Bankers Association, of the LaFalce proposal.

"If there is any question, it is whether 1.25% is too high," he said.

However, Ken Thomas, an independent bank consultant, told the House Banking subcommittee on financial institutions Friday that the higher level of reserves can be justified.

"The fund was at 1.245 in 1981, and that was insufficient, as it dwindled to a negative number in 1991 and 1992," he said. Mr. Thomas said the bank and thrift insurance funds should be merged and a higher goal set for the combined fund.

"The 1.25 designated reserve ratio in the resultant combined fund should be viewed as a floor with a goal of a 1.50 ratio in the immediate future and perhaps a longer-term goal of even more if warranted," he said.

Joe C. Morris, chairman of the Savings Association Insurance Fund Industry Advisory Committee, recommended merging the two insurance funds with a simultaneous recapitalization of the thrift fund.

Mr. Morris said the advisory council "recognizes the formidable opposition to any solution that involves a merger of the funds or other contribution from BIF members."

But he said that the fund could be topped off with the nearly $3 billion diverted from it to the Federal Savings and Loan Insurance Corp. resolution fund and Resolution Funding Corp. He recommended combining these funds with a portion of unspent Resolution Trust Corp. funds.

The committee is composed of 12 Federal Home Loan Bank appointees and six public members appointed by the FDIC. Mr. Morris called the committee's proposal "a solution that we believe objectively best achieves all the desired goals."

However, ranking Democrat Rep. Bruce Vento warned that the availability of RTC funds should not be counted on.

"Just because there are dollars left in the RTC resolution fund doesn't mean that it's some kind of honey pot," the Minnesota lawmaker said.

Yet analyst Bert Ely agreed with Mr. Morris on the point that Congress should restore the nearly $3 billion diverted from the thrift fund. He also argued that banks should pay a proportionate share of the Fico obligations and, in return, receive new powers or lessened regulatory compliance costs.

"The banks feel the thrifts are trying to pick their pockets, and the thrifts, who need the banks' help, have offered no ideas on how to transform a potential 'thrifts win, banks lose' scenario into a solution in which (all parties) . . . are better off than they are today," Mr. Ely said.

One savings banker who appeared before the panel told lawmakers that institutions like his should share the responsibility with thrifts for cleaning up after the savings and loan crisis.

Thomas M. O'Brien, chief executive of North Side Savings Bank, said the Bank Insurance Fund should help pay the $780 million a year thrifts pay in interest for Fico bonds.

"Sharing of this financing burden, which has actually benefited all banking institutions by removing failed institutions, would add 2.5 basis points to each bank's deposit insurance premium," said Mr. O'Brien, who testified on behalf of the Community Bankers Association of New York, which represents institutions insured by both funds.

"Frankly, as a BIF-insured institution, I'd be willing to pay that," added Mr. O'Brien.

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