a bill to shield thrifts with bad-debt reserves from $3 billion in back taxes. Ways and Means Chairman Bill Archer, who introduced the bill less than two weeks ago, said he plans to attached the measure to broad budget legislation Congress will pass this year. Also tacked onto the budget bill is legislation to bail out the thrift insurance fund and eventually convert nationally chartered thrifts to commercial banks. Rep. Archer's bill would suspend "recapture" of tax breaks thrifts received for their bad-debt reserves if Congress forces a conversion to commerical banking charters. Current law forces thrifts to pay back taxes on bad-debt reserves if they change their charters. Under the bill, reserves taken prior to 1988 would be exempt from taxes. Reserves taken in 1988 or later would be exempt only if a thrift meets an annual residential-loan test. To meet the test, a thrift would have to maintain yearly residential lending at a level at least as high as its 1990-1995 annual average. In a change from the original bill, refinancings and home equity loans would not count toward the residential-lending test. "This test is intended to be neither extremely easy nor extraordinarily difficult to meet," Rep. Archer said. "It is designed to encourage these institutions to continue providing financing for home ownership." The version of the bill passed Wednesday differs from the original by allowing thrifts to simply meet a set level of residential lending. The original proposal called for the test to be adjusted annually to reflect an institution's average residential lending in the previous six years. The test was altered because a moving average would have created a "rachet effect" forcing institutions to increasingly concentrate in residential lending, according to sources familiar with legislation. The new test, which will be annually adjusted for inflation, also allows each thrift the option of throwing out high and low years when calculating the six-year average. Another option provides that an institution that fails to meet its annual test would not be subject to tax recapture if it met the standard in the two preceeding years.

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