WASHINGTON - Federal Deposit Insurance Corp. Chairman Donna Tanoue refused Monday to give up on raising deposit insurance coverage, despite heavy criticism from a powerful trio of policymakers.

Senate Banking Committee Chairman Phil Gramm, Federal Reserve Chairman Alan Green-span, and Treasury Secretary Lawrence H. Summers have said a hike to $200,000 per account could trigger a crisis similar to the thrift debacle of the late 1980s and undercut market discipline.

Yet in a speech Monday at the American Bankers Association annual convention here, Ms. Tanoue said the issue should remain on the table as the agency develops final recommendations for reforming the deposit insurance system.

"Of course, we will take into consideration the respective views of Chairman Greenspan, Chairman Gramm, and Treasury Secretary Summers, but I say to all of you today that the coverage issue is a very legitimate one," Ms. Tanoue said. "It deserves all of our serious and considered attention and analysis."

The issue, Ms. Tanoue said, is not whether deposit insurance coverage should be doubled, but whether policymakers want to preserve it. "If we do, the question is whether we want to make sure the coverage level retains its real value over time," she said. "Put another way, we are asking whether the coverage level should be indexed in some fashion, and what is the appropriate index?"

Ms. Tanoue insisted in her speech, however, that neither she nor the agency has endorsed doubling coverage or any other specific reforms except merging the bank and thrift insurance funds.

Industry officials supported Ms. Tanoue's comments and said that Sen. Gramm, Mr. Greenspan, and Mr. Summers had criticized the idea before the FDIC discussed its broader plans.

"I think perhaps their opposition came in the context of just doubling the limit with no other reforms," said Donald R. Mengedoth, the incoming president of the American Bankers Association. "I would hope those three are open to comprehensive reform."

But while a coverage hike is considered popular among community bankers, some rank-and-file ABA members said it is not important to them.

"I may be in the minority, but I don't think a raise in the coverage limit will attract as many deposits as it used to," said J.R. Johnson, president of $60 million-asset Gibsland Bank and Trust Co. in Louisiana.

Ms. Tanoue spent most of her speech discussing ways to fundamentally alter how the insurance funds are managed. The FDIC has suggested two possible reforms in an "options paper" released last month: establish either a system in which banks pay a small premium each year for deposit insurance or one in which banks share ownership of the funds.

Under the first option, banks would pay for a government-backed guarantee of their funds on the basis of their deposits, the risk of failure, and amount that would be lost. Despite bankers' lobbying, the agency would not pay rebates or cap the funds, she said.

The second option, the so-called "mutual" model, is similar to the current system used by credit unions, which each keep 1% of their deposits in a fund. If a credit union gains deposits, it adds more to maintain that percentage. A credit union receives money back if its deposits slip.

Adopting either model for banks could help solve the FDIC's concerns about institutions that bring in substantial new deposits without contributing to the funds, Ms. Tanoue said.

Many bankers welcomed the second approach because they could earn rebates if their deposits dropped.


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