WASHINGTON -- The industry' fortunes have improved so much that the Federal Deposit Insurance Corp. may not need to tap the $30 billion credit line authorized by Congress last year, a key regulator said Monday.

In a brief interview following a Senate Banking Committee appearance, acting FDIC Chairman Andrew C. Hove said it is increasingly unlikely that his agency will need the funding, because of a vast improvement in bank earnings.

Profits Climb

FDIC-insured banks earned a record $15.7 billion in the first six months of 1992, 54% more than in the first half of last year.

Cautioning that he was not making a firm prediction, Mr. Hove said, "If we see continued strong earnings through 1992-93, it is possible we wouldn't" have to draw down the congressional allocation at all.

Revised Outlook

Mr. Hove's comments reflected growing optimism at the agency. After Congress established the credit line for the FDIC's Bank Insurance Fund last year, the agency expected to need the entire amount to cover losses over the next several years. Its current official estimate is that $11.8 billion ultimately will be used.

At Monday's hearing, Mr. Hove described an industry gaining in strength, a description echoed by John P. LaWare, Federal Reserve Board Governor, and Stephen R. Steinbrink, acting Comptroller of the Currency.

But a panel of experts outside government, mostly contended that banking's problems are so severe a taxpayer bailout is inevitable.

R. Dan Brumbaugh Jr., once an economist with the Federal Home Loan Bank Board and the author of several books on banking and thrift issues, estimated that 997 banks, with assets of $1.5 trillion, are in trouble.

He said the industry's worst problems have been masked by accounting techniques that inflate asset values. Moreover, he said, the risk that interest rates will turn against the industry is "extraordinary."

Difference of Opinion

"In my personal opinion, I do believe there is going to be a taxpayer bailout," Mr. Brumbaugh told the Senate panel. "They are taking enormous interest rate risks and selling off their best assets."

The lone dissenter among the nongovernment witnesses was consultant Bert Ely, who accused the FDIC of being too pessimistic.

He reiterated earlier estimates that the Bank Insurance Fund would lose no more than $15 billion to $20 billion through 1995, and probably much less. Those losses would be more than covered by bank premiums.

Monday's hearing was called by Senate Banking Committee Chairman Donald W. Riegle, D-Mich., to focus on the possibility of massive bank failures after the November elections -- a "December Surprise."

Most of the witnesses, including the nongovernment panelists, dismissed that possibility. Mr. Brumbaugh predicted the most significant failures would not come for several years.

The regulators conceded that some institutions would be closed when rules on prompt corrective action take effect in December. But they suggested the rules' impact would be primarily to hasten closures, rather than raise the overall number.

After Dec. 19, regulators are required to close banks with capital of 2% of less.

Of the 26 national banks with capital ratios under 2% at mid-year, Mr. Steinbrink said, 13 have either failed, been merged, or recapitalized. Three more are expected to fail by yearend, and 15 more in the first quarter of 1993.

Mr. Steinbrink estimated an additional 18 to 22 banks could fail in the final nine months of 1993.

Treasury Secretary Nicholas Brady criticized Sen. Riegle for holding the hearing, calling it "vacuous" and saying the nation "would be better served if the leadership of the Senate Banking Committee spent less time on counterproductive political posturing and more time on enacting financial services reform."

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