An 18-month battle to shore up the Savings Association Insurance Fund yielded just one victor: the Clinton administration.
Sure, the thrift industry is getting a solid fund and some help in paying long-term bonds, but the tab is steep. And the banks managed to save a bundle by fending off the fix for more than a year and withstanding attacks from rivals.
But even industry leaders admit that their gains were outstripped by the rescue's costs. The law, signed Monday by President Clinton, capitalizes the thrift fund and assures payment on the Financing Corp. bonds without any taxpayer dollars.
During the final days of debate on Capitol Hill, administration officials toned down the regulatory relief demanded by banks and defeated attempts to burden the bill with unrelated insurance amendments.
On Saturday, administration officials even persuaded Capitol Hill leaders to deny last-minute appeals for special treatment.
"Everybody who wanted something was in line to get a special deal," said Treasury Under Secretary John D. Hawke Jr. "If the line had been broken for any of them, then they all would have gone pouring through."
Indirectly, President Clinton provided the momentum for passage by demanding $6 billion in new spending from the Republican-controlled Congress.
Eager to adjourn early due to the campaign season, GOP lawmakers scrambled to find the money. The rescue moved to the top of the list because it generated $3.1 billion.
Several previous efforts to attach the thrift fund rescue to spending bills had failed, but this time Congress had no choice. Republican lawmakers had to pass a catch-all spending bill before Oct. 1 to prevent the government from closing.
Given the political damage Republicans suffered after shutdowns last fall and winter, they were in no position to fight the president.
Mr. Hawke said: "The SAIF rescue was a done deal" because it was paying for increases in education, disaster relief, and crime prevention .
The bailout package did receive nudges along the way.
In March, when the House Rules Committee rejected the bill, "It was apparent then that the bill could not pass in the form it was in," said thrift lobbyist James J. Butera. "It had to be tilted back toward the banks."
In July, the House Banking Committee agreed to delay the bulk of the industry's cost by three years. Rather than shouldering 75% of the $780 million annual Fico tab in 1997, banks would pay only $322 million a year until 2000.
"At that point the industry consensus made political consensus possible," said Paul A. Schosberg, president of America's Community Bankers, the thrift trade group.
About the same time, federal regulators starting letting thrifts shift deposits from the high-cost SAIF to the Bank Insurance Fund. This raised a scary possibility for lawmakers: If SAIF was not capitalized, more thrifts would try to escape and, eventually, the fund would not have enough money to pay off the Fico bonds.
As passage became more probable, the race was on to add provisions.
Banking lobbyists argued for relief from regulations, protection from environmental liability, and a ban on shifting deposits into the bank fund. The insurance industry pushed for restrictions on banks entering their business.
While no one is happy with the new law, banking trade group leaders contend they succeeded in preventing disaster.
"This could have come out much worse for the banking industry," said Kenneth L. Guenther, executive vice president for the Indepenent Bankers of America Association.
"We're pleased with the outcome," said Edward L. Yingling, chief lobbyist for the American Bankers Association. "The package they enacted is the package we've been advocating for last few weeks."
The bill's final form was in doubt until Saturday, when the House passed the huge spending package. In the final two days, a small group of lawmakers met with White House Chief of Staff Leon Panetta to work out the details - including regulatory relief, restrictions on bank insurance sales, and a ban on credit unions sponsored by government-sponsored entities.
After Mr. Panetta and Senate Majority Leader Trent Lott agreed to keep insurance limits out of the bill, the agents focused on killing pro-banking provisions. Worried that lawmakers would go along, banking trade groups split over which provisions to protect.
The IBAA, desperate to stop six Wisconsin Farm Credit banks from operating a credit union, mounted a full-court press to keep the prohibition in the bill despite opposition from agriculture committee members and Wisconsin lawmakers.
"My members feel that this was the most important pro-banking provision in the bill," Mr. Guenther said.
If anything was expendable, it was regulatory relief, he and IBAA lobbyists told Republican leaders.
After getting the IBAA message, Rep. Tom DeLay of Texas, the third- ranking House Republican, pushed to drop regulatory relief. Only intense protests from Rep. Jim Leach and Sen. Alfonse M. D'Amato persuaded Sen. Lott to retain the provisions, sources said. Rep. Leach also argued successfully to preserve the credit union restriction.
The White House then took Republicans to task over six regulatory relief provisions. Needing bipartisan support, Rep. Leach worked cut a deal with Treasury officials that softened revisions to Truth-in-Savings, Truth-in- Lending, Home Mortgage Disclosure, Fair Credit Reporting, Real Estate Settlement Procedures, and bank merger rules.
Just hours before the House vote, the White House again used its veto threat, forcing lawmakers to remove several special provisions for specific institutions.
For all the last-minute haggling, however, the thrift fund fix has been in the works a long time.
The first warnings of thrift fund's shaking funding came in the fall of 1993 from Jonathan Fiechter, acting director of the Office of Thrift Supervision. Sen. D'Amato and Rep. John LaFalce, D-N.Y., asked the General Accounting Office to investigate in 1994 and the congressional watchdog agency issued a report backing up Mr. Fiechter's warning.
In 1995, Congress finally began debating how to solve the problem. By December, a capitalization plan was passed and tacked to a balanced budget bill, which was vetoed by President Clinton.