Magazine article American Banker

Uphill Battle for ABA as It Defends Turf in Thrift Fund Fight

Magazine article American Banker

Uphill Battle for ABA as It Defends Turf in Thrift Fund Fight

Article excerpt

In the legislative battle over the fragile Savings Association Insurance Fund, it will be tough for the American Bankers Association to declare victory.

Of the seven points ABA has insisted are key to the banking industry, just one has materialized so far: The Federal Deposit Insurance Corp. slashed bank premiums 83%, dropping the average rate to 4.4 cents per $100 of domestic deposits.

"I think the one positive thing ... is the large reduction in the premiums," said Edward L. Yingling, ABA's lead lobbyist. "That's the one thing we have accomplished."

Mr. Yingling is quick to point out, however, that the legislative struggle is far from over.

"I have no idea what the final score will be," he said. "We're in the middle of a big fight."

The ABA took a huge risk on July 14 when it abandoned its long and fiercely held position that the problems facing the savings association fund were not urgent.

But the thrift industry convinced Congress otherwise and Senate Banking Committee Chairman Alfonse M. D'Amato made it clear he planned to include a thrift fund fix in a fast-track budget bill.

Realizing it could not stop the federal budget, ABA declared late on a Friday in July that it would join the debate.

The terms under which the banking industry would participate in a rescue of the thrift fund were laid out in letters ABA sent the House and Senate banking committee chairmen, the Treasury secretary, and the FDIC chairman on July 14.

In the three months since then, ABA has chalked up one solid victory and conceded defeat on another issue.

ABA tried in vain to pull Fannie Mae, Freddie Mac, and credit unions into the mix. "All parties with a potential interest" in the thrift fund's revival "should be required to contribute financially," ABA wrote in July.

"That was always a long shot," Mr. Yingling admitted last week. "It's just not going to happen. …

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