Rep. Doug Bereuter is trying to broker a truce among banks and thrifts that have spent months fighting over the faltering Savings Association Insurance Fund.
Legislation introduced this week by the Nebraska Republican would give the banking industry the "comprehensive" solution it has been seeking, including a merger of the two charters and insurance funds.
In return, the bill would require banks to foot part of the annual interest tab on Financing Corp. bonds. However, to soften the blow, Rep. Bereuter would require the Federal Reserve to contribute $2 billion of its surplus funds.
The legislation also grants all financial institutions regulatory relief, including an exemption from the Community Reinvestment Act for rural banks with less than $100 million.
On Jan. 1, 1998, all deposits insured by the thrift fund would be hit with a one-time fee to capitalize it, all insured institutions would assume equal responsibility for the Fico interest payments, and the bank and thrift fund would be merged.
Until that date, thrift premiums would be suspended, regulators would be empowered to stop deposit shifting between the fund, and the Bank Insurance Fund would pay any losses SAIF could not afford.