Brady Wants Phased Cutback of FDIC Coverage : Banking: His plans to overhaul the system, to be released this week, would limit the amount of insurance that any one depositor could receive.

Treasury Secretary Nicholas F. Brady said Sunday that his proposed overhaul of the nation’s banking system, due to be announced Tuesday, will feature a phased cutback of the federal insurance that backs bank depositors’ money.

“Don’t worry. Savers are going to be presented with plenty of opportunity to put their money in places that they will consider absolutely safe,” Brady said on ABC television’s Business World.

He gave no hint of how long the phase-in would last or what limits to deposit insurance there would be.

If adopted, the recommendations would represent the first scaling-back of federal deposit insurance since the Depression.

At present, the Federal Deposit Insurance Corp., a program established in 1933 to stop depositor runs on banks, guarantees repayment of up to $100,000 per bank account if a bank fails, no matter how many accounts a person holds.

But mounting bank failures nationwide are depleting the FDIC’s resources, and some politicians and bank analysts fear that the program will run out of funds in the next few years.

Brady said the Treasury’s proposal is aimed at limiting taxpayer liability. “The point is to make the system safe for savers, but yet to make sure the taxpayer does not have to pay enormous bills when banks fail,” he said.

The Washington Post said Sunday that the Brady plan would first limit the amount of coverage at each bank or savings institution, then, after five years, cap an individual’s total coverage at $100,000, no matter how many accounts are held at different institutions.

Brady said he favors dismantling the 58-year-old barriers between banking and the securities industry and removing geographic restrictions on where banks can open branches. But he did not say whether those issues would be included in his proposals.

“We want to make the new world of banking conform to these changing times,” Brady said, noting that technological changes such as electronic funds transfer and money market accounts have rendered old distinctions obsolete.

Such reforms are expected to face tough opposition on Capitol Hill. Many lawmakers are leery of liberalizing banking rules because, they contend, the thrift reform of the 1980s was what led to the savings and loan debacle.