Thrift executives want the government to simplify new rules governing small-business lending.

The Sept. 30 law rescuing the thrift insurance fund also doubled the amount of commercial credit thrifts may extend, to 20% of total assets.

To implement the law, the Office of Thrift Supervision issued an interim rule Nov. 27 that said any commercial lending beyond 10% of a thrift's assets must go to small businesses.

Under the rule, thrifts must use a Small Business Administration definition to distinguish which companies qualify as small businesses. OTS invited comments on the plan through Jan. 27. In eight comment letters to the agency, thrift executives and trade groups argued that this definition is needlessly complicated and confusing.

"While applying the SBA's size eligibility criteria may be justified for SBA government-guaranteed loans, they add an unnecessary layer of complexity in the case of day-to-day commercial lending," wrote Dale C. Lock, a corporate lawyer for Citibank Federal Savings Bank, a thrift subsidiary of Citicorp.

The SBA definition is a complex formula that incorporates a company's annual income, number of employees, and line of business. Gregg Elberg, president of First Federal Savings and Loan Association of San Rafael, Calif., argued that this formula may discourage his thrift from making small-business loans.

"Whether we will be able to pursue this activity depends largely on how complicated it is to determine whether a particular company constitutes a small business," Mr. Elberg wrote.

Several commenters suggested that the OTS use a simpler formula based solely on a company's annual income. Mr. Lock suggested setting the limit at $20 million; Mr. Elberg recommended $1 million.

Lou Nevins, president of the Western League of Savings Institutions, recommended that a small business be defined as a company with fewer than 500 employees or $5 million of annual income.

The OTS will respond to the comments by March 31, a spokesman said.

The rule also would remove limits on thrifts' credit card loans. Thrifts also are empowered to offer discounts to customers who maintain minimum balances in a variety of deposit, loan, and brokerage accounts.

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