Long-time Washington Watchers are shaking their heads over the intransigence shown by the banking industry--personified by the American Bankers Association--toward resolving the BIF-SAIF issue.

"It's astounding how badly the ABA has played this issue," says Alexandria, VA, consultant Bert Ely. "They've taken the attitude of, `Hell no, we won't pay.' Because they won't sit down, they've dealt themselves out of the game." Echoes a Washington consultant: "It's incredible. They just put their heads in the sand on this one." Even Sen. Alfonse D'Amato, the New York Republican, chided banks for their cavalier attitude" toward the problem.

Ely thinks there's "a high probability that banks will be stuck with having to pick up a portion of the FICO interest," referring to ongoing refinancing of the thrift bailout. That could be 2.5 basis point of premium cost, he says--as much as $600 million a year, industrywide--"and they won't get a thing in return." It's not clear exactly what banks could have gained by negotiating, but something surely beats nothing.

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