SAVINGS AND LOANS: Offers They Can't Afford

Just a week after President Bush unveiled his plan to bail out hundreds of insolvent savings and loans, some of them took a turn for the perverse by getting into a costly new interest-rate war. Houston's Commonwealth Savings cranked up the rates it pays on six-month "jumbo" certificates of deposit (typical size: $100,000) from 9.6% to a hefty 10.75%. In California, Pasadena's BancPlus Savings followed suit with a 10.5% six-month rate. One reason for the feverish run-up was the need for the thrifts to compensate depositors for the perceived risk of putting money in those S & Ls, despite the Government's promise to insure all accounts up to $100,000.

By widening the losses at insolvent S & Ls, the rate increases may drive up the cost of the federal rescue, which under Bush's plan could cost $200 billion during the next three decades. By week's end, though, the ailing S & Ls began to show some restraint. Rates on six-month CDs fell to 9.5% at Commonwealth and 10.1% at BancPlus.