No, IBAA Does Not Support Thrift-Fund Plan in Congress

To the Editor:

Your story Monday "IBAA, in a Turnaround, Endorses Congressional Fix for the Thrift Fund" (page 2) is inaccurate.

The position of the IBAA on this matter was reviewed by IBAA's board of directors on March 3. The position of the IBAA was and is strong opposition to the imposition of a $12 billion tax on banks to pay interest to private investors on bonds that were issued in 1987 to help pay for the thrift bailout.

As we have testified, the Congress has not asked the credit union industry to foot a part of the bill, even though its depositors are protected by federal deposit insurance. Congress has also failed to include government-sponsored entities, such as Fannie Mae and Freddie Mac, in the proposed tax, even though a default would harm the GSE securities market on which they are dependent for their financing.

A Fico tax on the banking industry alone would increase cost to banks and their customers and make the playing field for banks and credit unions, and other financial service providers even more uneven.

The story does correctly describe the possible lose-lose scenario facing bankers, the position of FDIC Chairman Ricki Helfer and Fed Chairman Alan Greenspan on this legislation, and the possibility that the SAIF-Fico fix could be attached to the next continuing resolution.

But the headline and the opening sentence regarding IBAA's position are dead wrong.

Kenneth A. Guenther

Executive vice president, Independent Bankers Association of America, Washington