WASHINGTON - Taking the first legislative crack at the issue, Rep. John J. LaFalce has proposed 12 ways to fix the insurance fund backing thrift deposits.

The New York Democrat's bills cover the gamut of solutions bandied about in recent months.

"It is my hope that these bills will now move the discussion along and allow us to focus more concretely on the specific requirements of a meaningful solution," Rep. LaFalce said on the floor of the House last Friday. "In my view, the right one is the one which can garner substantial bipartisan support in the near term."

Eight of Rep. LaFalce's 12 options involve using money left over from the original savings and loan cleanup - a politically controversial idea.

Resolution Trust Corp. funds could be used to recapitalize the Savings Association Insurance Fund or to pay off the 30-year bonds that the Financing Corp. floated in 1987 to start the cleanup, Rep. LaFalce said.

"I believe we should not be too timid to discuss using the unexpended RTC funds," he said.

But other lawmakers, including House Banking Committee Chairman Jim Leach, have criticized this option as another hit on taxpayers.

Rep. LaFalce reminded his colleagues that Congress reneged on its promise to help the thrift industry build its insurance fund.

"We should at least consider recognizing that original intent and making a modest amount of these excess RTC funds available as part of the solution," he said.

Rep. LaFalce's varied solutions also include a one-time assessment on thrifts to recapitalize SAIF or a merger of the bank and thrift insurance funds, which could include requiring banks to help thrifts pay off the Fico bonds.

The Bank Insurance Fund will soon reach the congressionally mandated target of $1.25 in reserves for every $100 of insured deposits, giving banks a huge cut in deposit insurance rates. But SAIF is $6.6 billion shy of the 1.25% goal, requiring thrift premiums to remain high through 2002.

Seeking a way around paying steep rates, some of the largest thrifts have announced plans to convert to banks. As thrifts leave SAIF, the fund's base will shrink and eventually its revenue will not cover its expenses. The thrift fund's biggest expense are interest payments on the Fico bonds, which absorb 44% of the fund's annual income.

Banking and thrift trade groups had opposite reactions to Rep. LaFalce's legislation.

"It's clear these bills aren't going anywhere anytime soon," said Edward Yingling, the American Bankers Association's executive director of government affairs. "It's clear that the Congress has no plans to act on this in the near future."

Brian P. Smith, America's Community Bankers' director of policy development, said: "We really agree with his diagnosis. We're thrilled that he's moving the ball ahead."

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