WASHINGTON - The nation's No. 1 and No. 2 thrift companies are taking on the American Bankers Association.
H.F. Ahmanson & Co. and Great Western Financial Corp. have written blistering letters rebutting the ABA's claim that a 19-cent gap in what banks and thrifts pay for deposit insurance poses no immediate problems.
In the middle of the war of words is Rep. Marge Roukema of the House Banking Committee.
The New Jersey Republican chaired a financial institutions subcommittee hearing on March 23 at which banking and thrift industry representatives faced off on the future of the Savings Association Insurance Fund.
The ABA sent Rep. Roukema a follow-up letter March 28, proposing that Congress block thrifts from avoiding higher premiums by chartering banks.
Great Western was the first thrift to apply for a bank charter to escape the 19-cent differential. Other thrifts have followed suit or are pursuing other ways around the approaching higher premiums.
In a letter to Rep. Roukema on Monday, Great Western chairman and chief executive James F. Montgomery called the ABA's position "disingenuous."
"It is thoroughly inconsistent for the ABA to argue that Great Western should not be able to create a holding company structure that encompasses both a national bank subsidiary and a thrift subsidiary when the largest commercial bank in the nation, Citicorp, has precisely the same structure," Mr. Montgomery noted.
Charles R. Rinehart, president of Ahmanson's Home Savings of America, took off the gloves in an April 7 letter to Rep. Roukema.
"Instead of viewing the issue in a narrow parochial framework in order to seek a short-term competitive advantage for banks, the ABA staff would better serve its members and the Congress by recognizing that a financially weak SAIF insurance fund threatens public confidence in the entire deposit insurance system," Mr. Rinehart said.
Rep. Roukema made clear at last month's hearing that she wants all factions to work together to come up with a solution.
The Treasury Department, the Federal Deposit Insurance Corp., and the Office of Thrift Supervision are trying to fashion a proposal everyone can back.
But that's a tall order. The ABA as well as the Independent Bankers Association of America have vowed to fight any plan that requires banks to contribute to the rebuilding of SAIF.
Meanwhile, the Senate Banking Committee is expected to hold hearings on the issue in mid-May. FDIC staffers have told industry sources that the agency is scrambling to come up with a solution by the time the hearings are held.
The two emerging alternatives are either to use leftover Resolution Trust Corp. funds. or to impose a one-time charge against thrifts to recapitalize SAIF. In either scenario banks could be called on to help thrifts pay off the bonds authorized in 1987 in an effort to rescue the thrift industry insurance fund.
Vehemently opposed to sharing the cost of paying off the Financing Corp., or Fico, bonds, the ABA has asked Congress to override the FDIC's decision that premiums paid on bank-owned thrift deposits are not available to fund Fico. (Premiums paid on these "Oakar" and "Sasser" deposits make up 45% of SAIF's income. Making these funds off limits for Fico increases the chance that the bonds will default.)
Reversing the FDIC's legal opinion, Great Western's Mr. Montgomery said, is not a permanent or comprehensive answer.
"The ABA tries to convey the impression that it is merely acting as a disinterested ombudsman," Mr. Rinehart added. "However, even if the regulators were to follow the self-serving advice of the ABA, the financial condition of the SAIF would not be improved and the taxpayers would be subject to the same amount of risk."
