WASHINGTON - A report expected this week calls on Congress to enact comprehensive legislation for the undercapitalized Savings Association Insurance Fund by July 1.

A draft copy of the SAIF Industry Advisory Committee's report makes an urgent case for fixing the thrift fund. Among the remedies proposed are its merger with the Bank Insurance Fund.

The committee also advocates requiring banks to pay part of the annual interest on bonds floated by the Financing Corp., or Fico, in 1987 to begin the savings and loan bailout.

The committee was established in 1990 by Congress to advise the Federal Deposit Insurance Corp. on the thrift fund. Its 18 members, including 12 thrift executives, meet twice a year and issue a report. Joe C. Morris, vice president of government affairs at First Bank Kansas in Overland Park, chairs the advisory committee.

A key to the fund's troubles is the coming gap in the rates that banks and thrifts pay for deposit insurance. The FDIC is expected this fall to lower bank rates to about 4.5 cents per $100 of domestic deposits, about 20 cents less than thrift rates. This differential has ominous implications for the thrift fund, according the report.

The report, which could still change before it is released, tells Congress to get moving or suffer the consequences of a bankrupt insurance fund and bond defaults.

"This is the watch on which a permanent solution, no matter how difficult, needs to be forged," the draft report states. "July 1, 1995, is a defining event. The SAIF and Fico problems no longer can be deferred."

July 1 is the day the Resolution Trust Corp. transfers responsibility for thrift failures to the thrift fund, which is also on the hook for $780 million a year in interest on the Fico bonds.

In addition to shifting some responsibility for Fico payments to banks, the committee recommends using leftover RTC money to capitalize the fund, to pay for future thrift losses, or to cover the Fico interest bills.

"The appropriated but unutilized RTC funds are the key to a comprehensive solution," the report states.

While several key lawmakers are interested in the issue, little action has occurred so far on Capitol Hill.

The House Banking Committee's financial institutions subcommittee held a hearing in March and Rep. Bill McCollum, R-Fla., is working on a bill that his office said will be introduced June 6.

Senate Banking Committee Chairman Alfonse M. D'Amato, R-N.Y., reportedly is interested in the issue and has his staff working with the Clinton administration on legislation.

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