Officials of one of Maryland's largest savings and loans, facing a proposed federal rule that could force their S&L out of business, contributed $12,000 to a senior Democrat on the House Banking Committee, who later became the champion of their cause in opposing the rule.

The contributions by 14 officials of Gaithersburg-based Standard Federal Savings Bank, the state's third-largest S&L, were made in February, March and April to Rep. Frank Annunzio (D-Ill.), who later called a hearing on the proposed rule, spoke out against it and asked for a General Accounting Office inquiry into the rule's effects.

Annunzio did not initially disclose the connection between the contributors and the S&L in his campaign financing reports. Under federal law, a congressional campaign is expected to disclose the occupation and employer of anyone who gives more than $200 in an election cycle.

Annunzio said he is amending his filings to reflect the occupations of the Standard Federal officials. The Federal Election Commission (FEC) is questioning Annunzio's initial lack of disclosure, which was first reported by the National Journal.

According to FEC reports, a dozen other S&L executives also donated money to Annunzio in the first half of the year. The contributions come at a time when many in Congress are refusing to accept money from S&Ls -- and when some are even giving contributions back -- because of the perception that S&L campaign contributions helped create the current savings and loan debacle by influencing congressional decisions that were part of a faulty regulatory environment.

The proposed rule, which has caused an uproar in the mortgage industry, would place new restrictions on S&Ls that service home mortgages -- that is, transferring monthly mortgage payments from homeowners to their lenders and handling other administrative chores associated with mortgage lending, such as payments of property tax and insurance.

Standard Federal services more mortgages than any other thrift in the nation, with $25.6 billion of mortgages as of June 30. But the proposed rule being considered by the Federal Deposit Insurance Corp. would alter the way these mortgages are recorded on the S&L's books, making Standard Federal insolvent.

Annunzio has said the regulations would be a burden on the S&L industry because it would push thrifts "that much closer to destruction." The FDIC says the change in accounting is needed to protect the insurance fund against the risks associated with mortgage servicing.

Shortly after the FDIC proposed the rule, Standard Federal officials began donating money to Annunzio, the banking committee's No. 2 Democrat and chairman of the House banking subcommittee that oversees financial institution regulation.

During February and March, four Standard Federal officials, including Chairman Allan Lang and his son Marvin, who is vice chairman, gave $1,000 apiece to Annunzio's reelection effort. Annunzio's reports to the FEC provided some information on the donors' occupations, but none of them was identified as working for Standard Federal.

In contrast, when Marvin Lang contributed to other campaigns this year, including donations to Rep. Jim Saxton (R-N.J.) and Rep. Steny Hoyer (D-Md.), he was identified in campaign reports as a Standard Federal employee. It's unclear whether Lang identified himself or whether those fund-raisers sought out his affiliation.

At about the same time as the Langs' contributions, Annunzio's campaign received separate $200 contributions from 10 other Standard Federal officials and their spouses. The 20 contributors, who included Standard Federal's president Emmett R. Garlock and many of the S&L's top-level managers, gave another round of $200 contributions in April. In reports to the FEC, Annunzio listed the donors' occupations as "unknown, to be obtained." The Standard Federal officials were the only individual contributors not identified by Annunzio in his FEC reports.

Following the initial campaign contributions, a Standard Federal executive also met with Curtis Prins, chief counsel to Annunzio's subcommittee, to discuss the rule. And another Standard Federal executive testified against the rule at a March 28 hearing before Annunzio's subcommittee. Standard Federal officials declined to return repeated telephone calls.

Prins said he became concerned about mortgage servicing before he met with Standard Federal's vice chairman Marvin Lang. He said Lang was one of a number of thrift executives who had expressed concern over the proposal -- concern that had been similarly expressed by other members of Congress, particularly Rep. Barney Frank (D-Mass.). The Resolution Trust Corp., the agency handling the cleanup of failed S&Ls, also has come out against the rule, saying it would render $130 billion of mortgage servicing contracts held by the RTC worthless overnight.

"Long before any of these {thrift executives} came in, we had established this was one of the areas we wanted to look into," Prins said.

He said the hearing on mortgage servicing was requested by Frank and other members of Congress, and was set up long before Phillip Bracken, a Standard Federal senior vice president, expressed interest in testifying. Bracken was asked by a group of thrift executives who have been lobbying against the rule to speak at the hearing on their behalf, Prins said.

"Had the campaign contributions been made or not made, it wouldn't have affected the decision to hold these hearings at all," Prins said. "I didn't even realize that Bracken was affiliated with {Standard Federal}."

Prins also said he did not know that Lang and other Standard Federal executives had contributed to Annunzio's campaign.

Kevin Tynan, Annunzio's campaign manager, said the $200 donations -- one batch of which arrived prior to March 30 and the second of which arrived April 11 -- were made for a fund-raising dinner held April 23 at the National Democratic Club.

Tynan said it wasn't unusual for the 20 checks to arrive all on the same day.

"It could be that one person or a couple of people were gathering them and bundling them and sending them to us," he said.

Tynan said the missing identification of the donors "wasn't caught" by campaign workers until the day the FEC filings were due. He said that letters were subsequently sent to each of the individuals to ascertain their occupations and that Annunzio's FEC filings are being amended to reflect the contributors' association with Standard Federal.

Standard Federal has been lobbying intensely against the FDIC proposal, which was prompted by last year's savings and loan cleanup bill that mandated new restrictions on an S&L's capital -- the amount of money that thrift owners must reserve on the books to protect the FDIC fund from potential losses.

The proposed rule would allow the value of mortgage servicing contracts to count for only 25 percent of capital. In the past, S&Ls faced no such restrictions and counted the entire value of the contracts toward minimum capital requirements.

But many questions have been raised about the actual market value of mortgage servicing contracts. In addition, there are a number of risks associated with mortgage servicing, including the risk of the large investment in equipment and manpower needed to service large mortgage portfolios.

The FDIC says the new restrictions on capital will protect the FDIC fund against these risks.

But if the new rule goes into effect as proposed, Standard Federal would need to raise more than $100 million in cash to continue operating its huge mortgage servicing business. The Maryland S&L already has been classified by thrift regulators as a "troubled institution" because it falls $54 million short of the current minimum capital requirements, and it is operating under a supervisory agreement with S&L regulators.

In its 1990 annual report, Standard Federal said it is "uncertain what impact any final amendment {to the rule} might have on the savings bank's future operations or its capital position."

Federal regulators, who declined to be identified, said the rules would hit Standard Federal hard, forcing the S&L into insolvency. Federal regulators could then take control of the thrift or close it.

"This ruling represents a life or death situation for them," said an FDIC attorney who asked not be identified. "They've built their entire business around this -- and quite frankly, that's exactly the kind of thing that worries us."

The FDIC was supposed to make a final ruling on its proposal in July. However, the enormous debate surrounding the proposal has forced it to delay the decision until the end of the year. Public comment on the rule is being extended through Nov. 13.