At the urging of Federal Deposit Insurance Corp. Chairman L. William Seidman, banking industry leaders are conducting secret discussions to try to find a way to pay for the staggering cost of bank failures without turning to taxpayers for help.

The bankers say they are determined not to let the banks' problems grow into a repeat of the costly savings and loan scandal and that their goal is to provide enough private money to replenish the FDIC's deposit insurance fund after the worst string of bank failures since the Great Depression.

Treasury Department officials have been sitting in on the bankers' talks, and President Bush is expected to call for bolstering the FDIC in his State of the Union address tonight.

Much of the impetus for the private industry plan to rescue the FDIC has come from Bush's old college friend Thomas "Lud" Ashley, who now heads the Association of Bank Holding Companies, which represents mostly larger banks.

Ashley reportedly has promised the president that the banking industry will find a way to avoid a taxpayer bailout of the FDIC.

"Everybody wants to come up with a workable plan that the banks can afford that will not be smoke and mirrors," said Diane Casey, who has been in some of the negotiations representing the Independent Bankers Association of America, an organization of smaller institutions.

The bankers have reached no agreement so far but are confident that they can avoid asking for help from the taxpayers, Casey said. But she warned that "if the prognosis comes out to be a Great Depression scenario, the banks can't pay it all."

Casey is credited with suggesting the strategy that Seidman is now following: "Lock all the lobbyists in a room and don't let them come out until they come up with a plan."

Representatives of half a dozen banking industry lobbying groups held three closed-door meetings last week at FDIC headquarters and are holding more sessions this week in other quarters.

So far, participants say, the banking leaders have not been able to see eye to eye on even the most basic questions: how much money is needed, how it should be raised and how it should be spent.

The alternatives under discussion include reviving the Depression-era Reconstruction Finance Corp. to invest in ailing banks; giving the FDIC a virtually unlimited line of credit to borrow from the Treasury; and requiring banks to contribute several billion dollars to the FDIC through loans, investments or higher deposit insurance premiums.

Seidman has told the bankers that the FDIC needs $5 billion immediately to keep the deposit insurance fund solvent and will require as much as $25 billion in additional funds over the next few years.

The Bush administration's budget, which is to be released Feb. 4, reportedly forecasts that the FDIC will run out of money by the middle of next year. The Congressional Budget Office is expected to present an even more pessimistic outlook today.

The $25 billion in additional funds that Seidman says the FDIC needs is more than banks are willing to pay and may be more than they can afford without crippling the industry financially.

The $25 billion is equivalent to the combined annual profits of every bank in the nation, officials of the American Bankers Association have said, and many banks would go under if they were hit by a big assessment for the FDIC.

Many banking industry officials insist privately that Seidman is overstating the FDIC's needs to increase pressure for prompt action, but they are reluctant to challenge his cost estimates for fear of being compared with savings and loan executives who argued for years that the S&L problem was manageable.

The bankers are sensitive to the political implications of the deposit insurance issue in part because the Bush administration will soon release a major legislative proposal recommending that banks be allowed to get into other kinds of business, such as selling insurance and investments, and to open branches across state lines.

Federal barriers between banking and other businesses would be removed so that non-banking companies could invest in banks.

Such an expansion of powers would be meant to strengthen the banking system, but Congress is not likely to give the industry any new powers if it is simultaneously being asked to bail out the banks, industry officials said.