WASHINGTON - Credit unions ought to chip in to rebuild the flagging Savings Association Insurance Fund, according to the Florida Bankers Association.

Credit union reaction to the proposal was resoundingly negative.

The Florida banking group, whose members include thrifts as well as banks, wants credit unions to join banks and thrifts in paying the $779 million annual interest due on Financing Corp. bonds, which were issued in 1987 to begin the savings and loan cleanup.

The group's solution also includes reducing the reserve requirement for all deposit insurance funds to $1.10 per $100 of insured domestic deposits, from $1.25; transferring $3 billion of unused Resolution Trust Corp. funds to the SAIF; and allowing the thrift fund to borrow $1.7 billion from the bank fund.

Finally, the group wants to transfer jurisdiction of the National Credit Union Share Insurance Fund to the Federal Deposit Insurance Corp., which already runs the bank and thrift insurance funds.

Tom Hughes, president of Navy Federal Credit Union, Vienna, Va., bristled at the plan.

"I don't see why credit unions should suffer," he said. "They've capitalized their fund and never gone after the government for any money."

Tapping credit unions for bailout bond payments is part of a plan to settle the feud between banks and thrifts over an impending deposit insurance premium reduction for banks. Insured banks have restored the Bank Insurance Fund's reserve to its required level of 1.25% of insured deposits, and they expect the FDIC to reduce their premiums from an average of 23.5 cents per $100 of deposits to 4.5 cents.

Thrifts, meanwhile, have made little headway in replenishing the SAIF, in large part because the bond interest payments siphon off 45% of their premium assessments. If bank premiums are reduced, thrifts say, the resulting 19-basis-point cost differential would put them at a fatal competitive disadvantage.

The American Bankers Association has staunchly opposed kicking in any money to help thrifts, but the Florida group said bankers should recognize that thrift resources are insufficient to replenish the SAIF. And they should offer a plan to eliminate the shortfall, the state group said.

Otherwise, they warned, government would drag banks into a more burdensome bailout plan.

"We'd rather face it on the front end than deal with it in a crisis situation," said John Milstead, executive vice president of the association.

Mr. Cahill writes for the Medill News Service.

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