The national debate over the thrift charter is being echoed in Iowa.

With Congress threatening to abolish the federal thrift charter, savings and loans in the Hawkeye state are urging lawmakers to create a new state savings bank charter.

If the plan were enacted, Iowa's 30 thrifts could convert to the new charter and retain liberal branching rights. Iowa is one of a handful of states that forbids commercial banks from branching into communities where another bank already operates.

Commercial banks could also use the new charter to better compete with brokerage firms, credit unions, and other financial services companies, said Richard L. Goodson Jr., president of Iowa's Community Bankers, a thrift trade group.

"In the past we believed that our biggest competitor was our friend who owned the bank across town or even in the next town," Mr. Goodson wrote in an open letter to the state's banks and thrifts last month. Branching restrictions, he continued, would "tie us down while ... other financial intermediaries gnaw away at our business as surely as termites eat away at a house."

Most of the Northeast states have had state savings bank charters for years and Missouri, Illinois, Michigan, Indiana, and Ohio have created thrift charters in recent years.

"More states are developing a savings bank charter because they want the additional flexibility," said Robert R. Davis, government relations director with America's Community Bankers.

Bankers oppose the bill. Larry Burch, acting chief executive officer with the Iowa Independent Bankers, said Congress ought to eliminate the thrift charter entirely.

"It's basically our position that banks spent a lot of money bailing out S&Ls and we're certainly in no mood to help them get a new charter," said Mr. Burch.

The thrift industry's bill is expected to be introduced to Iowa lawmakers this week. Though the legislation is likely to generate heated debate in Des Moines over the next few weeks, the agency that regulates state-chartered institutions plans to remain on the sidelines.

"Our office is going to stay out of this and let the trade associations determine whether it passes or not," said Steve Moser, deputy superintendent with the Iowa division of banking.

Meanwhile, the Iowa Bankers Association is backing legislation to let commercial banks add more branches in their own communities.

Iowa law prohibits banks from operating more than four branches in metropolitan areas with a population under 100,000, five branches in communities with under 200,000 residents, or six branches in cities of more than 200,000. The Iowa Bankers' bill, which has the support of banks and thrifts, would eliminate those restrictions.

"Our competitors can put offices wherever they like," said John K. Sorensen, president of the Iowa Bankers Association. "This is an effort to make sure banks can compete with them."

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