Business Notes BANKING

Nobody likes to pay for other people's mistakes -- least of all the bankers at Great Western Financial of Beverly Hills. So the California giant, the third largest savings and loan association in the U.S., with assets of $31 billion, was indignant in 1987, when the fees it pays the Federal Savings and Loan Insurance Corporation for insurance coverage on deposits went up by 150%, to $43 million a year. Healthy S and Ls like Great Western were being forced to subsidize the cash-starved agency's efforts to rescue scores of poorly managed, insolvent institutions.

Last week Great Western announced that it would try to escape the FSLIC burden by applying for coverage from the Federal Deposit Insurance Corporation, which protects commercial banks. Since banking problems have not become as severe as the S and L crisis, the FDIC has not raised its premiums as much as the FSLIC and would charge the California institution only $17 million. Congress passed a law in 1987 prohibiting most federally insured S and Ls from abandoning the FSLIC, but Great Western's executives plan to circumvent the ban by merging with a Washington State savings bank that is already covered by the FDIC.

Federal regulators are bound to fight the defection in order to discourage other healthy S and Ls from attempting to follow suit. A mass desertion could bankrupt the FSLIC fund and saddle taxpayers with the expected $50 billion to $100 billion bill for rescuing the savings industry.