zero for most banks, stay this low? At the Federal Deposit Insurance Corp., where premiums are set, they aren't making any predictions. "There really are no estimates," said Roger Watson, the FDIC's director of research and statistics. "But on the other hand, until you start to see problems that are not isolated, you're not going to see an increase in premiums." A few blocks north, at the American Bankers Association, chief economist James Chessen is willing to be more specific. "Certainly through 1996," he said. "And I think there's a very strong case to be made that zero would hold through 1997 as well." But if you want a truly long-term, out-on-a-limb projection, you have to cross the Potomac and head to the Alexandria, Va., office of the oracle of deposit insurance, banking consultant Bert Ely. What does Mr. Ely predict? "I don't think we're going to see any premiums until 2000, 2001," he said. After that, he projects that healthy banks will pay premiums of no more than 1.53 cents per $100 of deposits until at least 2007. This does not include the 2.5 cents of savings and loan bailout bond payments that Congress will probably force bankers to make. Mr. Ely's predictions would perhaps sound a little nutty, or at least Pollyannaish, if it weren't for his track record. In the mid-1980s, when thrift trade groups and lawmakers were still denying there was a problem, he predicted that cleaning up the savings and loan mess would cost tens of billions of dollars. Then in 1991, when the Washington consensus was that the Bank Insurance Fund would be underwater for years, he predicted that it would soon be healthy. He was of course right both times, though he underestimated the cost of the S&L bailout, which in the end will cost taxpayers close to $200 billion. His excuse: He had no idea it would take Congress so long to fix the problem. Mr. Ely, an accountant by training, came up with his insurance premium estimates the same way he arrived at his past projections - by crunching a lot of numbers. He assumed annual insurance fund losses of 0.8 cent per $100 of deposits, interest earnings on bank fund reserves of 5% a year, deposit growth of 4.5% a year, and a strict adherence to the 1.25% reserves-to- deposits ratio set by Congress. He did not factor in the premiums paid by riskier banks that don't qualify for the zero premium - one of several reasons he thinks his projections are probably too pessimistic. Banks could end up paying slightly higher premiums, however, if they use their deposit insurance savings to court customers with better deals on loans and deposits. "That's what I call a good-news problem," Mr. Ely said. "If banks have to start paying premiums a year or two earlier, it will be because of deposit growth, not losses." Mr. Ely said he is confident that big bank fund losses aren't in the cards, because it takes the bursting of a speculative bubble - as happened in Texas and New England in the late 1980s and early 1990s - to cause lots of banks to fail, and he doesn't see any such bubbles developing. "There could be something on the horizon that we don't see coming," he said. "But I keep scanning the horizon." Mr. Ely acknowledged that either an act of Congress or a massive natural disaster could upset his projections.

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