There's a lot of talk in Washington about plugging the holes in the thrift insurance fund with "leftover" Resolution Trust Corp. money.

The bold want to use the cash to rebuild the Savings Association Insurance Fund. The less daring simply want to invest the money and use the interest to help SAIF.

But how much money are we talking about anyway? How would this all work? And what are the obstacles?

The RTC Completion Act of 1993 gave the cleanup agency $18.3 billion to resolve failed savings institutions. About $4 billion has been spent. The Office of Thrift Supervision has estimated that another $1.2 billion to $4.9 billion could be used before the RTC goes out of business in December.

So that means somewhere between $9.4 billion and $13.1 billion will be "leftover."

SAIF needs about $6.7 billion to reach its reserve target of $1.25 for every $100 of insured deposits. The rest of the funds could be invested, and the interest earned could be used to pay SAIF's bill for the Financing Corp. bonds floated in 1987 to begin the industry's rescue.

The 1993 Completion Act did leave open the possibility that unused funds could be funneled to SAIF for two years after the RTC closes.

"Until the end of 1997, SAIF can, under certain circumstances, use unspent RTC funds to cover losses at failed SAIF-insured institutions," Treasury Assistant Secretary Richard S. Carnell testified recently.

At the same hearing, Federal Deposit Insurance Corp. Chairman Ricki Helfer outlined those conditions.

But first a little background.

The banking industry is on the verge of a massive cut in deposit insurance rates. By yearend the average bank will be paying 4.5 cents for every $100 of domestic deposits; the average thrift pays 24 cents.

The thrift industry is worried that this huge difference in expenses will cost them customers and shareholders.

That's where the conditions come in.

To get the money, the FDIC must certify that SAIF members could not pay the higher premiums without eroding the fund's assessment base or hurting the industry's ability to raise and maintain capital.

The FDIC also must certify that an increase in SAIF premiums would result in thrift failures, which would end up costing the government money.

"Congress required those certifications in an effort to ensure that SAIF members pay the highest rates possible before taxpayer funds are used to cover SAIF losses," Ms. Helfer testified recently before a House Banking panel.

At a Senate Appropriations subcommittee hearing last month, Ms. Helfer also noted that the strict conditions make it unlikely that RTC money will "provide swift, effective assistance for SAIF in the event that the fund is depleted."

The conditions, however, apply only to SAIF, so it is possible that RTC money could at least be used to fund the Financing Corp., or Fico. Thus the Completion Act blocks the use of excess RTC funds as SAIF reserves, but leaves the door open for them to pay off Fico.

Ironically, a separate budget law takes the opposite tack, allowing the use of unspent RTC funds as SAIF reserves, but shutting down the option of using them to pay off Fico.

The Budget Enforcement Act of 1990 mandated that all costs for new programs enacted by Congress must be offset by cuts elsewhere. Under the law, there is an exemption for "deposit insurance outlays," or refunds to taxpayers who lost money in failed institutions.

Using RTC funds as SAIF reserves does qualify as funding for the government's deposit insurance commitment. But Fico payments do not.

So, the unspent RTC funds could be invested and the money generated could take SAIF off the hook for $779 million in interest payments on the bonds, which total 45% of its yearly income.

This would allow all of the assessments to go toward recapitalizing the fund. FDIC estimates dumping the Fico obligation would allow SAIF to recapitalize by 1998, assuming there are no major thrift failures.

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