WASHINGTON-The Treasury Department has submitted its draft for deposit insurance reform, which includes many provisions from previous proposals but no coverage increase. Their recommendations were in response to a request from Senate Banking Committee Chairman Richard Shelby (R-Ala.). Treasury's draft would merge the Bank and Savings Association Insurance Funds into the Deposit Insurance Fund; eliminate limitations on Federal Deposit Insurance Corp. assessment authority and create a `Sense of the Congress' that the FDIC should assess each insured depository institution a premium; set a reserve ratio range between 1.15% and 1.50%; remove the 23-basis point assessment if the fund falls below the range to provide greater flexibility; and establish transition assessment credits for institutions in existence on December 31, 1996 and paid a premium prior to that date. Additionally, the draft of the bill would reduce the time for institutions to maintain records of assessments from five to three years. What Treasury's draft legislation does not include is an increase in deposit coverage. The House bill (H.R. 522) provides for $130,000 coverage for individual accounts and indexes that amount for inflation. Retirement accounts would be insured up to twice the standard maximum. Minus the deposit insurance increases, the bill would not affect credit unions. CUNA and NAFCU have been working to ensure that if there is a coverage increase, the National Credit Union Share Insurance Fund would receive equal treatment. FDIC would have no more than 270 days after the law's enactment to create regulations. The draft would also require a study on the fund's assessment base within a year. Bankers have had mixed reactions to the proposed bill, but all the groups have said it needs some work. The American Bankers Association advocated making the credit system permanent, providing a statutory maximum premium for the highest rated banks, amending the cap language to have a mandatory cap with rebates at 1.40%, and amending the historical basis approach to make the calculations more certain. The group's aim is to stem the effects of rapidly growing institutions from diluting the insurance fund. America's Community Bankers Executive Vice President and Managing Director of Government Relations Robert R. Davis said the group was pleased to see the proposal with so many provisions it has supported. "However, we are disappointed that the bill does not seriously address problems created by free-riders which significantly dilute the fund," he said. "We are also concerned that the lack of mandatory rebate provisions will result in a tendency to over capitalize the deposit insurance fund, limiting banks' ability to meet community credit needs." On the other hand, the Independent Community Bankers of America President and CEO Ken Guenther said up front, "The ICBA believes coverage levels must be substantially increased in any comprehensive reform proposal, and will continue to urge the Senate to do so. The ICBA cannot support any Federal deposit insurance reform legislation that does not include such coverage increases." [email protected]