Save the neighborhood savings bank

The thrift industry, comprising savings and loan associations and mutual savings banks, is in trouble. So is a key beneficiary, the US housing industry. Locked into fixed returns from low-yielding mortgages made in past years, yet forced to pay currently high interests rates to attract new deposits, thrifts are expected to lose something like $6 billion this year. Some 265 federally chartered thrifts, moreover, are on the government's "problem list" of troubled financial institutions, up from 120 at the end of 1980.

As a way of aiding the thrifts, which are facing intense competition from money market mutual funds, the industry is pushing a piece of special-interest legislation called the All Savers Certificate. The new one-year certificates would provide investors 70 percent of the rate on a one-year Treasury bill. Up to $1,000 of such interest would be exempt from federal income taxes.

How times have changed from the early 1930s, when President Roosevelt's first actions to shore up the nation's troubled banking community had widespread support. Now, the certificate, as one immediate way of helping the savings industry, is winning congressional support but Wall Street and the Reagan administration are skeptical and the general public is indifferent.

Certainly there is little concern about the thrift industry "crashing" in the way that the banking industry went under during the great depression. Yet, what is curious in the current debate is the extent to which opponents of the legislation minimize the important linkup between the thrift industry and the nation's housing market by implying that monies diverted into home mortgages (the essential undertaking of thrifts) is somehow not as "productive" an investment for the nation's well-being as investment in factories.

As studies have established, the US faces a long-range housing crisis. During the 1980s alone, 21 million new units, or 2 million units a year, will have to be built to meet demand. Housing starts now are poking along at the annual rate of 1.1 million units.

The administration has been unduly slow in grasping the problems of the thrifts. Moreover, there is a genuine question as to whether it yet perceives the developing housing crisis. The thrifts themselves, and some commercial banks offering home mortgages play a unique role in American society. Found in virtually every neighborhood, and still the main "savings institution" for most families -- as contrasted, say, with mutual funds, used by a minority of savers -- thrifts and commercial banks provide the financial services that lubricate and knit together communities and businesses.

The All Savers Certificate concept does pose problems. Such certificates would most benefit persons in tax brackets of 32 percent and above. The government's Treasury losses would either be substantial, or made up by slicing in half the current $400 income-dividend interest exclusion. Worse yet, to gain support, the measure has been extended to commercial banks. Congress will have to address these concerns.

Yet, when all is said and done, opponents must answer to the American public on whether they really want to see the failure of a number of thrifts and a pell-mell rush toward unbridled consolidation within the banking and savings industry. Such a course could prove injurious to the diverse towns and neighborhoods of the US. The certificate proposal is a limited one-year plan (though it would span several tax years). Opponents have the obligation of finding a more workable alternative. In the meantime, lawmakers seem to be well -- and wisely -- out front of the ad ministration on this issue.

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