WASHINGTON -- House Banking Committee Chairman Henry B. Gonzalez has outlined six ways to rescue the Savings Association Insurance Fund -- including a merger with the Bank Insurance Fund.

In a memo last week to the committee's 50 other members, the Texas Democrat indicated that every possible option is being considered. He even asked whether there should be "a gradual conversion of thrifts to banks followed by the abolishment of the thrift charter."

With its promise of hearings early next year, Rep. Gonzalez's memo is the first congressional move on the biggest legislative issue likely to face the banking and thrift industries in the next Congress.

"We can't -- and I won't -- allow another savings and loan fire to start before building a fire station," he said.

Rep. Gonzalez's nine-page memo lays out the problems facing SAIF, namely, the fund's shrinking assessment base and its inability to recapitalize itself.

Created in 1989 by the thrift bailout law, SAIF took over interest payments on the bonds issued in 1987 as a sort of down payment on the industry's cleanup costs. Interest due on these bonds, issued by the Financing Corp. or FICO, totals $779 million a year.

SAIF pays this bill out of thrift insurance premiums. Currently, FICO eats up about 44% of SAIF's annual income. But the revenue total keeps shrinking as SAIF's assessment base withers at least 6% per year.

There's another wrinkle. About one-quarter of the deposits covered by SAIF are owned by banks that acquired thrifts. These so-called "Oakar banks" are required by law to keep paying SAIF premiums, but the money may not be used to pay off the FICO bonds, according to the Federal Deposit Insurance Corp. As more thrifts are bought by banks, SAIF has less money available to pay off the FICO bonds.

Rep. Gonzalez's memo goes over all these facts and concludes with six options, beginning with a merger of the two funds. "The obvious appeal of this proposal is that it creates a healthy, viable insurance fund with no taxpayer assistance," the memo states.

But the memo notes that a merger would rob banks of $4 billion -- the amount the industry's insurance premiums would decline once the Bank Insurance Fund is recapitalized next year. When the bank fund has $1.25 for every $100 of insured deposits, the FDIC is expected to reduce bank premium rates by as much as 20 cents per $100.

Twists on the merger option include reducing the recapitalization level to $1 for every $100 of insured deposits, which would eliminate the delay in lower rates for banks, the memo said.

The memo contends that lower reserves "may be justified by ... prompt corrective action" rules that require regulators to take over a problem bank while it still has capital.

A fund merger also could be accompanied by incentives for banks such as payment of interest on reserves held at the Federal Reserve or expanded powers, the memo said.

Before a merger, a special assessment also could be imposed on thrifts, designed to "boost the SAIF to the highest level possible and correspondingly reduce the cost of the merger to the banks."

Other options discussed in the paper include:

* Preventing a premium differential by keeping bank rates high or reducing thrift premiums.

* Relieving thrifts of the FICO burden and adopting a 2% "FICO surcharge" on banks.

* Transferring unused money from the Resolution Trust Corp. to SAIF.

* Permitting Oakar bank premiums to be used for FICO payments.

* Changing the deposit insurance assessment base to include home loan bank borrowings.

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