WASHINGTON - What began as a simple plan to merge the bank and thrift funds has become a hydra of deposit insurance reform options with no consensus in sight.

The Federal Deposit Insurance Corp. has produced 84 pages of possible changes, ranging from doubling the coverage per account to fundamentally altering how the funds are managed.

The only recommendation in the agency's "options paper" is merging the Bank Insurance Fund and the Savings Association Insurance Fund. One fund, the FDIC argued, would better diversify its risk of loss by combining the number and type of institutions insured. Currently, 14% of the bank fund's deposits are held by three institutions; the three largest members hold 15% of the thrift fund's deposits. In a combined fund, the three largest institutions would hold only 12.7%.

The FDIC also contends that the differences between the two funds have become blurred now that BIF members own almost 50% of SAIF-insured deposits.

A combined fund would top $40 billion in reserves, or $1.38 for every $100 of insured deposits. (The bank fund currently has $29.8 billion, with $1.35 for every $100 of insured deposits, while the thrift fund has $10.5 billion, and $1.44 for every $100 of insured deposits.)

The banking industry has long fought a simple merger of the funds. Until recently, the American Bankers Association was demanding a merger be tied to a combination of the commercial bank and thrift charters as well as the Office of Thrift Supervision and the Office of the Comptroller of the Currency.Edward L. Yingling, the ABA's chief lobbyist, said bankers want excess reserves rebated and a cap placed on how large the FDIC can allow the fund to grow. The group also wants per-account coverage increased.

"There was never going to be a simple bill merging the funds," Mr. Yingling said. "If you just address that, it removes any incentive for Congress to take a comprehensive approach. There are other issues that need to be dealt with."

Kenneth A. Guenther, executive vice president for the Independent Community Bankers of America, agreed that major problems have to be addressed, including the erosion of the coverage limit, how to rescue "too big to fail" banks, and new and fast-growing institutions that pay nothing for deposit insurance.

"We need a comprehensive approach, not a rifle-shot approach," Mr. Guenther said. "Bankers are opposed to doing this [a fund merger] by itself."

So, under pressure from the banking industry, the FDIC agreed to consider a broad range of reforms. In the process, the agency appears to have become convinced that more than a simple merger of the funds is necessary.

At a recent press conference, FDIC Chairman Donna Tanoue said she believes the pricing system creates "inappropriate incentives and raises fairness issues," while the management of the funds forces "banks to fund insurance losses when they can least afford it."

She added that depositors are "uncertain as to the future real value of FDIC coverage." The agency is now offering even farther-reaching reforms, including altering the risk-based pricing to account for expected loss to the funds, instituting a steady premium paid each year by all institutions, and tying the coverage limit to inflation from 1980.

But some of these suggestions have already angered powerful political opponents, such as Senate Banking Committee Chairman Phil Gramm, Treasury Secretary Lawrence H. Summers, and Federal Reserve Board Chairman Alan Greenspan.

Sen. Gramm blasted the notion of doubling the coverage limit to $200,000 per account the day FDIC Chairman Donna Tanoue first suggested it in March. "I'm not going to support raising them under any circumstances," he said. "I think if anything $100,000 is too high."

Mr. Greenspan and Mr. Summers criticized the idea at a Senate hearing in June, arguing that the last increase, in 1980, helped cause the savings and loan crisis.

The FDIC plans to recommend a broad package of reforms to Congress early next year.

As the FDIC makes its decisions over the next few months, industry leaders will hand-wring and horse-trade. Some will even continue to advocate a clean merger of the funds.

"Merging the funds is good public policy," said Diane Casey, president of America's Community Bankers. "Everybody thinks this is a good idea; let's go ahead and do it. It doesn't interfere in any way, shape, or form with anything else on the table."

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