WASHINGTON - Legislation to overhaul the Federal Home Loan Bank system, pronounced dead in July, got a jump start last week.

And it required astonishingly little voltage.

The measure's revival materialized Tuesday in the form of a simple amendment adopted during House Banking deliberations on a budget bill.

The measure, sponsored by Rep. Richard Baker, R-La., removed the trickiest hurdle blocking the reform bill: how to reallocate among 12 district banks interest payments due on thrift bailout bonds floated in 1989.

Rep. Baker plans to hold two days of hearings on the Federal Home Loan banks this week, which lobbyists expect will clear up any lingering questions lawmakers have. With the bond interest allocation problem fixed, the bill's prospects for passage in the House look good.

While the Senate Banking Committee has not touched the subject yet, one Capitol Hill aide noted that Chairman Alfonse M. D'Amato may support it to accommodate the Federal Home Loan bank in his home state of New York.

Rep. Baker's legislation would make membership in the home loan bank system voluntary and push decision-making authority to the district banks, away from the federal agency that oversees the system, the Federal Housing Finance Board.

The original plan for dividing the $300 million due every year on the Resolution Funding Corp. bonds did not wash with the district banks because some would pay more than others. In meeting after meeting, the district bank presidents could not come up with an agreeable Refcorp allocation formula.

This vexed Rep. Baker so much that he canceled a July vote on the measure. Boom. The bill was dead.

But last week the prospects for the Baker bill took a 180-degree turn. Rep. Baker's new-and-improved allocation formula would ax the $300 million requirement and simply charge each district bank a flat 22.63% of net income.

The most remarkable thing is that the district banks agree on the new formula.

"I'd call it historic," said Alfred A. DelliBovi, president of the Federal Home Loan Bank of New York. "Sometimes the most contentious things get solved with the most simple approaches, and I'm glad that's what happened this time."

So why didn't anyone try this before? Because nobody thought it could be accomplished without costing the government money - a no-no under the GOP's seven-year plan to balance the federal budget.

"The barrier has always been the budget, and I don't think anyone ever thought this would work," said John Hardage, acting director of congressional affairs for the Federal Housing Finance Board.

Simply relying on a percentage of income runs the risk of bringing in less than the $300 million the federal government now collects. However, the Congressional Budget Office found deficits in one year would be made up by surpluses in other years.

In fact, the budget office found that the new formula would save $400,000 over the next seven years. That's a drop in the budget-balancing bucket, but it was enough to allow Rep. Baker to get approval for his plan.

"That was the technical hurdle we needed to cross," said Bruce A. Morrison, chairman of the finance board.

Under current law, each district bank must turn over up to 20% of its income to pay off the Refcorp obligation. If this totals less than $300 million - and it has every year - then the shortfall is collected from each district bank in proportion to its advances to members insured by the thrift insurance fund.

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