IT'S NOT FAIR. That's what independent bankers are saying about the Federal Deposit Insurance Corp.'s handling of bank failures. When a small bank fails, they charge, its uninsured depositors and big creditors are often out of luck, and money. But when a large bank falls, the corporation steps in to guarantee deposits.

The independent bankers have a point. There always has been some inequity in the treatment of large and small failing banks, and it is time for the corporation to reconsider its deposit insurance policies. But the financial system's safety, not absolute equity, should be the key.The current system of absolute protection for the largest institutions is not the best answer. It encourages depositors to place their money in large institutions, with little concern for the bank's financial condition. So even while the big Texas banks were ailing, they were able to attract large new depositors by offering high interest rates. Customers of all sizes could safely ignore the bank's financial condition, secure in the knowledge the government would guarantee their deposits.

The deposit insurance agency recognizes the problem but so far has not found an alternative that is fair, secure and encourages depositor discipline. If, for example, the corporation allows a big bank to fail, it also will take down dozens of smaller banks who kept correspondent relationships with it. If the government ensures deposits against all eventualities, depositor discipline disappears.

And then there are the brokerage houses and insurance companies, which already view banks as unfair competitors. If the government raises deposit insurance premiums on the larger banks on the theory that they will be the recipients of the most corporation aid, they will be put at a competitive disadvantage. At least until they restructure into non-insured subsidiaries.

The solution to the deposit insurance dilemma necessarily must be more complex than any of these proposals. Incrementally, the agency must find a way to make depositors accept some of their own risks without eroding the underlying safety of the financial system. There are several ways to do this.

Risk-based insurance premiums, based on a bank's capital adequacy rather than its size, would help. This is an idea that has been around almost as long as bank bailouts, yet it has never come to pass. Another remedy is to require the strict segregation of speculative activities into non-insured bank subsidiaries that would not be paid dollar-for-dollar should the bank fail. Additionally, the corporation itself is trying to draw up capital adequacy standards that would vary with the riskiness of the bank's investments.

All of these changes would act together to incrementally raise the costs of risk-taking to the banks and their depositors.

Finally, the government could establish some limits on compensating depositors. Even when bailing out the biggest of the big, like Continental Illinois, Penn Square or Texas' First Republic Bank, the argument that there is no threshold for depositor losses remains unpersuasive. Beyond whatever limits the government sets, all depositors, be they rich individuals, large institutions or interdependent small banks, would absorb their losses when a big bank goes down.

Setting such a level would be difficult but not impossible. It would make depositors more cautious in choosing where to place their money but not be painful enough to set in motion astring of failures. Limits could be set on a bank-by-bank basis, since the corporation's big bank bailouts are few and the circumstances of each case different. Limits on the corporation's largess would be hard for some to swallow but they also would be more equitable than the current system.

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