WASHINGTON - The government is relying upon some precarious presumptions to decide how much to charge banks and thrifts for deposit insurance.

When Federal Deposit Insurance Corp. officials met last week to propose radical cuts in bank premiums, the agency predicted that the assets of failed banks would reach $2 billion this year and double in each of the next two years, rising to $10 billion by 1998.

The more the FDIC spends cleaning up after failed banks, the more it can justify charging for deposit insurance.

"I don't think there is any justification for making wild assuptions about losses two or three years in the future," said Jim Chessen, chief economist of American Bankers Association. "They're looking at the 60 years of FDIC history as their guide to the next couple of years, which I think makes no sense at all."

While the ABA is thrilled that bank premium rates will finally fall, Mr. Chessen insisted the FDIC should be more aggressive.

"It looks like even the 4.5-cent average rate is going to raise more revenue than they need - a lot more revenue," he said. "The rate going forward should be less than 3 cents."

The FDIC is barred from reducing premiums until the Bank Insurance Fund has $1.25 for every $100 of insured deposits. The agency expects that target to be hit between May and July. If rates average 4.5 cents, as proposed, the FDIC predicts the ratio will soar to 1.33% in 1996.

"The proposed risk-based schedule will raise far more money that they need to maintain the 1.25%," Mr. Chessen said.

At 1.33%, the FDIC would have $1.5 billion more than the $25 billion required to reach 1.25%.

"Bankers would rather have that money in their banks in their communities and not with the FDIC," according to Mr. Chessen.

The thrift industry isn't any happier with FDIC's prognostications.

While recommending that thrift premiums be maintained at 23 cents to 31 cents for each $100 of domestic deposits, the FDIC assumed that the Savings Association Insurance Fund's assessment base would shrink just 2% a year.

The Office of Thrift Supervision's acting director, Jonathan Fiecther, characterized the 2% prediction as "overly rosy." SAIF's shrinkage is likely to be triple the FDIC's estimates, he said. In fact, the thrift fund has declined an average of 5.8% every year since its creation in 1989.

By underestimating how much SAIF may atrophy, the FDIC is downplaying the impact of the gap between bank and thrift premium rates. The average bank premium will be 4.5 cents by yearend, while the average thrift will be paying about five times that.

"They've taken numbers that are way below trend lines and way below recent experiences," said Lou Nevins, president of the California League of Savings Institutions. "They have assumed ... that things are going to get better very quickly."

Even a 4% shrinkage in SAIF's base - double the FDIC's figure, but still below the average decline - would prevent the thrift fund from ever recapitalizing, Mr. Nevins predicted.

The FDIC's forecasts have been way off before. In the early 1990s, the agency predicted that up to 239 banks with $116 billion of assets would fail in 1992. The failure tally that year actually was 122 banks with $46 billion of assets.

Roger Watson, the FDIC's research director, admitted: "All the assumptions are heroic."

Still, Mr. Watson defended the agency's estimates, noting that 1994's nominal losses of $193 million "cannot be viewed as an average year.

"We're starting from a very low base right now," he said. Mr. Watson added that rising interest rates are likely to eat into bank profits. Losses may rise as well, he said, now that banks are beginning to lend again.

"Every time lending increases, there are mistakes made and there will be losses," Mr. Watson said in an interview.

The FDIC has a committee of top staffers from various divisions who meet to develop a consensus failed-bank forecast for the next two years. Any prediction beyond two years is based on the agency's experience since its creation in 1933.

"We're always wrong," Mr. Watson said. "All people who try to predict the future with any degree of precision are always wrong.

"But these assumptions are based on the best information and intuition we have."

The $2 billion of failed bank assets in 1995 and the $4 billion forecast for 1996 are the committee's work. The $8 billion figure predicted for 1997 "is a pure guess and isn't necessarily an informed guess," Mr. Watson said.

Still, the banking industry cannot assume the good times of the last couple of years will continue, he said.

"On what basis can we possibly assume that the world is going to stay exactly as it is now?" Mr. Watson asked. "We really may be underestimating these losses."

The FDIC could have used an average of the last 10 years rather than the last 60. "If we had," he said, "these numbers would be much larger."

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