WASHINGTON - Banking industry representatives will square off today at a congressional hearing on merging the bank and thrift deposit insurance funds.

While all factions of the industry now support blending the Bank Insurance Fund with the Savings Association Insurance Fund, they part ways over the particulars.

The American Bankers Association backs broad legislation that trades a merger of the funds for a premium rebate, a cap on the combined funds' size, and a combination of the bank and thrift regulatory agencies.

But that is more - and less - than other industry groups want.

America's Community Bankers will accept a fund merger without any other sweeteners such as a rebate. The thrift group also opposes combining the Office of Thrift Supervision with the Office of the Comptroller of the Currency, considering it a step toward merging the bank and thrift charters.

Congress "could order a merger of the funds today without further condition," according to testimony ACB chairman William A. Fitzgerald plans to deliver today to House Banking's financial institutions subcommittee. "And ACB believes that you should do so without reopening the debate over the thrift and bank charters."

However, another group, the Independent Community Bankers, disagrees with the ABA that a rebate or cap is crucial. The community banking group wants Congress to double, to $200,000, the amount of deposit insurance provided to individual customers and index that cap to inflation.

"Today's deposit insurance limit is economically inadequate and unacceptable," ICBA president-elect Thomas J. Sheehan is expected to testify. "Even with the modest inflation witnessed in recent years, deposit insurance is worth about half of what it was worth in 1980."

Congress increased deposit insurance coverage to the current $100,000 level in 1980, from $40,000.

The ABA has taken no position on whether insurance coverage should be increased, the group's lead lobbyist, Edward L. Yingling, said Tuesday. Instead, it is focusing on gaining a rebate of premiums paid to the Federal Deposit Insurance Corp., which administers both the bank and thrift funds.

Banks and thrifts have paid in $4.2 billion more than the funds are required to hold; a 1991 law mandates $1.25 in reserves for every $100 of insured deposits.

The ABA also wants Congress to establish an upper limit to this 1.25% minimum reserve ratio, possibly between 1.35% and 1.50%. Currently, the bank fund has $1.38 in reserves backing each $100 of insured deposits; the thrift fund's reserve ratio is 1.44%.

Mr. Yingling noted that raising the insurance coverage would reduce these ratios because the reserves would be backing far more money. Reducing the ratios would prevent or at least delay a rebate, he said.

"There is a direct tradeoff between rebates and increasing the deposit insurance limit," he said. "We're going to make a big push to cap the funds."

In an interview Tuesday, the lawmaker chairing today's hearing - Rep. Marge Roukema - said she wants to hear what the government's witnesses have to say on rebates and caps. (FDIC Chairman Donna Tanoue and Treasury Assistant Secretary Gregory A. Baer are expected to support merging the funds but object to capping the size of the funds or paying rebates.)

The New Jersey Republican said she would prefer to simply merge the funds if that sort of narrow legislation could pass this year but said she is keeping an open mind on what sorts of sweeteners should be included to gain the industry's support.

Rep. Roukema did make it clear she does not support merging the bank and thrift charters. "That is not part of the agenda - merging the savings and loan charter," she said. And the lawmaker said raising deposit insurance limits is unlikely in this politically charged election year. "It is a logical question, but I don't foresee action in that direction," Rep. Roukema said. "I don't think we know enough yet on how this new financial world is working."

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