WASHINGTON - The government is soon expected to decide a thorny question: Should a bank or thrift be allowed to belong to multiple Federal Home Loan banks?

Washington Mutual Bank FA, a Stockton, Calif., subsidiary of Washington Mutual Inc., has forced the issue by seeking to join the Dallas Home Loan Bank and retain its membership in the San Francisco Home Loan Bank. The Wamu unit wants to join the Dallas bank because it recently acquired Bank United, an $18 billion-asset thrift in Houston that was a member.

Under current rules, the unit would be required to pay off all of Bank United's outstanding advances and surrender its membership, but the Federal Home Loan Bank of Dallas filed a request with the Finance Board in December to let the Wamu unit become a member of both.

Opponents claim that bending the rules for the unit will give institutions with a national scope the ability to play one Home Loan bank against another in an effort to get more favorable loan and dividend rates.

"It is a dangerous, dangerous precedent they are asking to be set here," said Dale J. Torpey, president and chief executive officer of Community State Bank of West Branch, Iowa and chairman of the Federal Home Loan Bank of Des Moines. "It would be to the advantage of one and the disadvantage of thousands."

Washington Mutual Bank FA Bank characterized its desire to belong to both banks as a means of protecting the system from damage that industry consolidation could inflict.

"We are a strong supporter, both historically and going forward, of the cooperative nature of the system and its regional structure," said Benson Porter, senior vice president for government relations at the Wamu unit. Before the Dallas Home Loan bank loses any funds "by our departure, we would like to see the system develop a long-term policy with regard to the structural issues."

The Federal Housing Finance Board, which oversees the 12 Federal Home Loan banks, will issue a preliminary proposal on Feb. 28 titled "Systemwide Implications of Multi-District Member Operations," asking for comments on how - and if - regulators should ease the current rules, which allow institutions to join only the Home Loan bank district where its main office is located.

The current rules grant one exception: Different banks owned by the same holding company may be members of separate Home Loan banks. For instance, a separately chartered Wamu subsidiary belongs to the Federal Home Loan Bank of Seattle.

But Wamu Bank's case is open to challenge because it plans to fold Bank United into its existing charter.

"There are 98 banks that, through their holding companies, already have multiple membership," said John L. Von Seggern, president of the Council of Federal Home Loan Banks. "That is not precedent setting. Having one bank under one charter is."

Opponents, like Mr. Torpey, argue that dual membership would allow Wamu to play the different Home Loan banks off each other in an effort to get preferential rates on advances and dividends.

"If this goes through, you have basically a national charter in the Federal Home Loan Bank System for large banks," Mr. Torpey said. "I would not be able to go out and negotiate rates, but they would, and they obviously have greater buying power than we have as a small $63 million bank. If they start moving across these districts, small community banks could wind up with less favorable terms."

Mr. Porter denied that his company would play Home Loan banks against each other. Wamu has never engaged in such behavior with the Seattle and San Francisco Home Loan banks, he said.

However, other Home Loan bank officials said the move is simply a necessary modernization of the system.

In a press statement released on Tuesday, Alex J. Pollock, president of the Chicago Home Loan bank, said: "I view the Dallas application favorably, as part of the adjustment of the Federal Home Loan banks to the strategic fact of the consolidation of the American financial system."

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