Most banks oppose a plan in Congress to capitalize the Savings Association Insurance Fund, but there are defectors in the industry's ranks.

Remember the Oakars?

Those are the 771 banks that must pay higher premiums on $215 billion in thrift deposits. The savings association fund charges 23 cents for every $100 in deposits, while the Bank Insurance Fund levies no premium at all.

So while most banks oppose the thrift fund rescue, some Oakar banks - named for former Rep. Mary Rose Oakar, the Ohio Democrat whose amendment allowed the deposit purchases - have an economic incentive to back the bailout legislation.

Under the plan now before Congress, Oakar banks would receive a $350 million cut in their share of a one-time fee on thrift deposits designed to rebuild the fund. While most thrifts would pay an assessment of 85 cents per $100 in insured deposits, Oakars would pay 20% less.

For the roughly 300 Oakar institutions with thrift deposits comprising at least 20% of total deposits, the bill's costs are offset by special breaks.

Lobbyists for Oakar banks last fall won the break after arguing that much of the thrift deposits they acquired had run off.

"We think right now we're paying insurance premiums on deposits we don't own," said James D. Barr, executive vice president and treasurer at Crestar Financial.

The industry as a whole opposes the legislation because it would require banks to pony up about $600 million a year for the next 21 years to retire Financing Corp., or Fico, bonds, which were issued in the late 1980s to begin the first S&L bailout.

Oakars supporting the plan include Barnett Banks Inc., Crestar Financial Corp., First Union Corp., Amsouth Bancorp., First Maryland Bancorp, and a host of smaller institutions, according to Carol Van Cleef, a Washington attorney representing Oakar banks.

In a letter last month, 33 banks urged Republican leaders to enact the thrift fund fix. First Union was not among the banks signing the letter, but sources said the Charlotte, N.C.-based holding company is lobbying lawmakers to pass the plan.

First Union officials would not comment for this story. Ms. Van Cleef is trying to get more Oakars to sign a second letter she hopes to send lawmakers soon.

Aside from the special assessment break, Oakars are concerned that thrifts will move deposits from their fund to the Bank Insurance Fund, undercutting both in the process, she said.

The American Bankers Association has fought desperately to block the rescue, arguing that forcing banks to help pay off the Fico bonds amounts to a new tax on the industry.

But Ms. Van Cleef said all banks should be worried about the migration of thrift deposits because that would dilute the bank fund, forcing the entire industry to pay higher premiums.

"The bottom line is that the banking industry as whole is going to feel the pain one way or the other," she said. "The weakening of the Bank Insurance Fund is just going to get worse over time."

The Oakars' break was strongly opposed by America's Community Bankers, the thrift trade group, which argued that other thrift members would pay more for rebuilding the fund. Brian Smith, the trade group's director of policy development, said it's ironic that some Oakars are now allies. "Politics makes strange bedfellows on occasion. We just want to get this thing done," he said.

But most Oakar banks are still fighting the bailout legislation. Columbus, Ohio-based Banc One Corp., which holds $6 billion in SAIF deposits, remains strongly opposed.

"We think accepting the tax on banks without any consideration of what is good for the industry and for our customers sends a disheartening message to the Hill," said Anne L. Hall, Banc One's lobbyist.

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