Who should try an 'all-savers' certificate?

Is it sweet news for small savers or a stunning success for the saving and loan lobby? The Reagan tax bill has created a new way for you to save. It's called the "All-Savers Certificate." It's tax-free, relatively cheap, and can be bought at your neighborhood financial institution.

If you make at least a moderate salary, it might be a good place to stash your savings. But the certificate's primary purpose is to help out battered savings and loan (S&L) associations. Whether it will work is a matter of keen debate.

At stake: the ability of S&Ls to keep mortgage money flowing. How much do they cost? When and where can I buy them?

Beginning Oct. 1, one-year All-Savers Certificates will be for sale at banks, S&Ls, mutual savings banks, and credit unions. They will cost $500 and up, in increments of $500. The interest rate you get will be 70 percent of the most recently issued one-year Treasury bill. T-bills have lately returned around 16 percent -- so an All-Saver issued now would yield about 11 percent. Your first return). To qualify for this exclusion, the bank or S&L that sold you the certificate must invest at least 75 percent of the funds in home mortgages, or agricultural loans.

But this offer is for a limited time only. All-Savers won't be sold after Dec. 31, 1982. Should I buy one?

S&Ls lobbied hard for All-Savers to become law, because they felt it would be an attractive enough investment to lure cash from money market funds and certificates of deposit.

At current rates of return, say most financial experts, you should be in at least the 30 percent tax bracket before considering an All-Savers.

Tim Howard, an economist at Wells Fargo Bank estimates if All-Savers had been available since 1979, anyone with at least $20,200 of income, on a joint return, would have gotten more money from it than from a 6-month money market certificate, or a 2 1/2-year small saver certificate.

And if your salary was at least $29,900, on a joint basis, you would have been better off in an All-Savers than in those wildly popular money market mutual funds.

Mr. Howard estimates that "All-Savers certificates, should rise to a quite substantial $200 billion by the end of 1982." Will they help keep my neighborhood S&L afloat?

Like anchovies on pizza, the All-Savers Certificate is either loved or hated. There seems to be no middle ground.

Critics don't mince words. Charles Schultze, chairman of President Carter's Council of Economic Advisers, calls it "that idiotic All-Savers thing." He says it won't attract much new cash. Instead, he says, it will mainly lure money already in S&Ls. And a lot of experts think Congress has committed itself to a permanent bailout.

"Think what would happen to all that money if it expired in '83," says Jack Porter of Seidman & Seidman. "No. It's permanent."

But All-Savers could reduce the cost of money for S&Ls up to 6 percent over 15 months, according to Howard. And Paul Mackey of Bache estimates the savings certificate, all by itself, will turn the S&L industry's predicted $2 billion loss for next year into a $2 billion profit.

Next: winners and losers in the tax bill.