Two senior Democrats on the House Banking Committee predicted Congress will rescue the Savings Association Insurance Fund next month without providing any regulatory relief to banks.

In interviews during the Democratic National Convention, Reps. John J. LaFalce of New York and Bruce Vento of Minnesota also said new bank powers should be stripped from the legislation.

"I don't know what banks will agree to, and I don't know if that's a relevant consideration," said Rep. LaFalce. "We ought not be timid.

"I believe the SAIF bailout could pass standing alone."

Without a reduction in red tape, the banking industry will not support the rescue.

"If we're not getting anything in exchange of any significance, we're not for it," countered James M. Culberson Jr., president of the American Bankers Association. "In fact, I would be very much opposed."

"The No. 1 priority of the IBAA throughout this legislative year has been regulatory relief," said Kenneth A. Guenther, executive vice president of the Independent Bankers Association of America. "We are disappointed at this Democratic gambit."

Reps. LaFalce and Vento also said Rep. Jim Leach, chairman of the House banking panel, should drop his effort to attach new industry powers to the SAIF capitalization bill. The Iowa Republican's plan to expand some banks' merchant banking powers and allow all financial firms to set up uninsured wholesale banks is "fraught with controversy," said Rep. LaFalce.

Rep. Vento said the implications of giving wholesale financial institutions access to the Federal Reserve payment system have not been adequately examined. "The impact could be substantial, but we don't know," he said.

Mr. Guenther told House Speaker Newt Gingrich in a letter Tuesday that the IBAA would oppose the thrift fund rescue bill if the so-called WFIs, or "woofies," are included. "Allowing nonbank entities access to the payments system undermines the franchise value of all banks," Mr. Guenther said.

When Congress resumes its session next week, it will have no more than 17 working days before its scheduled adjournment Sept. 28. With time so short, opponents will have plenty of leverage to block provisions. The best hope for enacting a thrift fund fix might be to attach it to a broader budget bill Congress must pass before adjourning for the year.

Legislation to capitalize the savings association fund has been pending in Congress for more than a year. The banking industry has opposed the rescue because it would force banks to help pay off long-term Financing Corp. bonds used to bail out the savings and loan industry in the late 1980s.

Banking trade groups finally agreed last month to support a revised version of the rescue as long as regulatory relief was part of the package.

Democrats, however, are arguing that the regulatory provisions in Rep. Leach's bill would damage consumer protection laws and should be scaled back or dropped. "We shouldn't erase 20 years of consumer laws in just one bill," said Rep. Vento.

Rep. LaFalce and Rep. Vento, interviewed during receptions this week for Democratic congressional candidates, contended that the banking committee would run more smoothly if their party controlled Congress.

Rep. Leach was constantly revising his bills in hopes of striking a deal between trade groups from the banking and insurance industries.

If Democrats regain control, both Rep. LaFalce and Rep. Vento are expected to challenge Rep. Henry Gonzalez of Texas, the committee's ranking Democrat, for the chairmanship. Neither lawmaker would comment on that possibility.

Rep. LaFalce did offer a few clues about what path he would take if he gained the committee's helm. He said he favors "more ambitious" financial modernization than Rep. Leach pursued this year.

Rep. LaFalce said he favors a Glass-Steagall Act repeal similar to one proposed by Senate Banking Committee Chairman Alfonse M. D'Amato, R-N.Y., allowing commercial companies to enter banking.

Rep. Leach's plan would have prohibited nonfinancial companies from owning banks.

"My thinking has a lot more in common with Sen. D'Amato than with Jim Leach," Rep. LaFalce said.

Rep. Vento would only say he is not convinced commercial firms should be allowed to enter banking. "John goes further than I would," he said.

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