The Savings Association Insurance Fund rescue is expected to play a key role this week as Congress attempts to avoid another budget showdown with President Clinton.

Senate Democrats may try to use the thrift fund fix to pay for social programs the President wants. "They are looking for offsets and this is on everybody's list," said Floyd Stoner, an American Bankers Association lobbyist.

A new spending bill must be enacted by Friday to avoid a shutdown of seven government agencies.

On Thursday, the House passed legislation containing $3.3 billion of the $8 billion in additional spending being requested by the White House. Republicans, however, made those extra funds contingent on offsetting cuts in entitlement programs.

The Senate is expected to act on its spending proposal early this week. President Clinton has vowed to veto any package that does not include his $8 billion request.

Providing Senate Democrats $6 billion toward a compromise, the thrift fund bill would assess a one-time, 80-basis-point fee on thrift deposits. A related measure to recapture past thrift tax breaks also would contribute to total savings.

Although Republicans themselves have considered using the thrift fund rescue to pay for tax cuts, they may oppose using it to preserve social spending. "I'm not sure if House Republicans would be enthused by that prospect," said Steve Verdier, lobbyist for America's Community Bankers.

Rather than tacking the thrift fund fix to a spending bill, Mr. Verdier said he believes it could be included in the next debt ceiling increase, which must be enacted by March 29.

The thrift trade group is lobbying hard to get the rescue into any type of legislation that must be enacted soon. Without the fund's capitalization, thrifts will continue to pay insurance premiums of 23 cents per $100 in deposits while banks pay next to nothing.

Banks oppose the plan just as vigorously because they would be forced to assume nearly $600 million in annual payments for bonds used finance the 1989 thrift industry bailout.

Blocking the thrift fund fix forever would be difficult because the budget fight is forcing Congress and the White House to rely on short-term measures to keep the government running, said Karen Shaw Petrou, president of ISD/Shaw Inc. "The advantage goes to the SAIF capitalization, because there will be so many vehicles that the banks have to fight off," she said.

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