Legislation to bail out the Savings Association Insurance Fund is finally primed for passage.

Approval is expected before Congress adjourns - as early as Friday or as late as the middle of next week.

While the bill's main provisions are set after 18 months of wrangling, lobbying remains ferocious on ancillary issues such as bank insurance powers, deposit-shifting between insurance funds, and restrictions on government-sponsored enterprises.

In a letter Monday, the chief executives of 55 of the largest banking companies, including Chase Manhattan Corp. and Norwest Corp., asked every senator and congressman to vote against the bill's insurance licensing provisions.

"We strongly encourage you to oppose all insurance industry amendments," the letter said. "Our industry is being asked to pay billions of dollars to help resolve continuing financial concerns resulting from the S&L rescue.

"Incredibly, the insurance industry is demanding that amendments designed to protect that industry from the legitimate proconsumer competition from banks be added to this BIF/SAIF legislation."

Because time is short and insurance powers are controversial, the bankers are expected to prevail. However, they may be sacrificing regulatory relief. Insurers are demanding lawmakers drop efforts to cut bankers' red tape if the insurance provisions are eliminated.

"Any member who votes for legislation which includes bank regulatory relief provisions without corresponding insurance industry-supported provisions should not be considered a friend of this industry," Carroll A. Campbell Jr., president of the American Council of Life Insurers, wrote in a memo to his members last week.

But American Bankers Association chief lobbyist Edward L. Yingling said, "Reg relief is locked in. Everybody we've talked to in both the House and Senate said it will be in the package."

House Banking Committee Chairman Jim Leach wrote the insurance provisions into the SAIF legislation to ensure that state insurance commissioners could not discriminate against banks.

But the wording is so vague that it could be used to lock banks out of local markets, he said Monday. Besides, the banking industry has already won the fight for insurance powers in the lawsuit Barnett Banks Inc. filed against Florida's insurance commissioner.

"By changing the law, you run the risk of reopening matters that have already been decided by litigation," Rep. Leach said. "The concern is that it is a lessening of the Barnett standard for purposes of licensing."

Meanwhile, lobbyists for large thrifts are trying to eliminate a provision barring institutions from shifting money out of the thrift fund and into the Bank Insurance Fund. "This language could interfere with their right to communicate with their customers," said Ken McLean, a lobbyist representing two major California thrifts.

The Independent Bankers Association of America is working hard to retain a prohibition on government-sponsored enterprises' chartering of credit unions. The measure was proposed early this year after the Farm Credit System tried to open a credit union in Wisconsin.

Allowing the Farm Credit System to charter credit unions "could dramatically shift the balance of who finances agriculture from community banks to the Farm Credit System and credit unions," said Kenneth A. Guenther, the IBAA's executive vice president.

While these issues continue to be debated, the heart of the thrift fund rescue seems settled. It will include:

*A one-time fee on thrift deposits to raise the $4.7 billion needed to capitalize the insurance fund.

*A formula for sharing the cost of repaying Financing Corp. bonds that would require thrifts to pay $460 million a year while banks paid $320 million through 1999. As of Jan. 1, 2000, banks' share would jump to $585 million annually.

*A promise that the bank and thrift insurance funds would not be merged until the industries' charters are combined.

Also considered final are provisions to protect lenders from cleanup liability on environmentally contaminated property acquired in foreclosures.

Just last week, the thrift fund legislation was not expected to pass. Sept. 17, when the House Rules Committee canceled a vote on the measure, industry sources said its chances as a stand-alone bill were nil.

Proponents then began pushing to attach the thrift fund rescue to one of two spending bills, both of which must be approved before Congress adjourns. While voting on these bills may not be wrapped up until the weekend, congressional leaders are expected to make the call on what is in or out of the fund fix bill today or Wednesday.

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