NEW YORK -- Howard McMillan, the new president of the American Bankers Association, plans to spend much of the next year bargaining over insurance rates.

With the Bank Insurance Fund expected to recapitalize next year, Mr. McMillan and other bankers want the Federal Deposit Insurance Corp. to cut their premiums by as much as two-thirds.

"It's in FDICIA and it's not up for debate," he said, referring to the FDIC Improvement Act, which set the target level for the fund's reserves.

Mr. McMillan, the president and chief operating officer of Deposit Guaranty National Bank, Jackson, Miss., said in an interview last week that he also plans to oppose those who argue that the fund should be merged with the Savings Institution Insurance Fund.

"The thrift industry is not in a death spiral and its fund is not going broke," he said, rejecting the notion that thrifts will be at a competitive disadvantage if they pay a higher premium than banks.

In fact, he said, banks survived a similar competitive disadvantage during the long years of Regulation Q, when thrifts, by law, were permitted to pay a quarter-point more for deposits than banks. "Banks survived that and they can survive the premium disparity," he said.

Of equal concern for Mr. McMillan is the rise of the Department of Justice as a regulator of fair lending practices at banks.

In recent months, Justice has threatened to file complaints against lenders and then negotiated settlements. "It's one of the most worrisome issues the industry faces," he said. "Justice can in effect hold up your business."

Although the record is mixed so far, supervisory agencies might be unwilling to approve acquisition applications if a Justice Department complaint is pending.

"If you're under investigation and you want to open up a branch, they can hold you up," he said. "And litigation expense can be a bottomless pit."

Much of his mission, he said, will be to strive for more reasonable regulation.

"When banks are stifled, the economy slows down," he said. "When regulation moves to more reasonable proportions, banks can take care Of their customers and the economy can grow."

Two other issues could become important next year, Mr. McMillan said.

On one, the ABA will seek passage of legislation limiting lender liability for environmental contamination.

And on the second, the trade group will probably oppose efforts, if they resurface, to merge the bank regulators into a single agency.

"It is important for the economy that we maintain the dual banking system," he said. "I haven't seen a plan yet for a single regulator that maintains the dual banking system."

Mr. McMillan said a banking career was something "in the back of my mind as a young boy growing up" in Mississippi.

He was sidetracked briefly in college during the 1960s, when engineering seemed more important to the national interest.

"I tried it for about three semesters and just didn't enjoy it," he recalled. "So I changed my major to banking and finance."

He and his wife, Mary Eliza, raised two children -- both of whom have grown up and moved on -- in Jackson, not far from where he grew up.

And he makes it clear that Jackson is where he wants to stay. It's the kind of place, he said, that is friendly to people like him who like hunting, fishing and golf.

"If you like golf, we have one of the best courses in the country 15 minutes from Jackson," he said. "And some of the best duck hunting in the country is 45 minutes from here."

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