
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, July 28, 1990                   TAG: 9007310317
SECTION: EDITORIAL                    PAGE: A-11   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

S&L WASTE TAKES ON NEW MEANING

MAYBE YOU thought nothing could make the savings-and-loan scandal worse. Wrong. Not only have S&L managers and unscrupulous businessmen ripped off the public while living in grand style. Not only will the bailout of failing and insolvent S&Ls cost hundreds of billions of dollars for years to come.

Now it comes out that some of these mismanaged financial institutions also own environmental problems. Somebody's got to solve them. And it looks as if the bill for that will fall to - ah, yes - the American taxpayer.

In charge of the S&L salvage operation is the Resolution Trust Corporation. That agency owns hundreds of these failed institutions, whose assets include real estate and other property. One way of recovering some of the costs of the bailout is to sell off the assets.

Unfortunately, it turns out that, while some of the properties look good, beneath their surfaces lurk environmental hazards.

One is a town-house and boat-slip development in New Jersey that Resolution Trust thought might sell for tens of millions of dollars. But first, the feds may have to clean up the site at a cost of several million dollars.

Another is a residential complex in Hawaii with 202 units, a pool, tennis courts, landscaped grounds, views of Hilo Bay and other amenities. Arsenic was found in a pond on the property and in the soil. The complex, valued at $7.6 million, has not found a buyer.

There are other headaches such as a leaky underground fuel tank that is contaminating ground water; buildings with asbestos problems; and a commercial structure with toxic water running across its land. The Resolution Trust Corporation has found it has about 300 properties with environmental problems.

So who pays? A lot of people are trying to look the other way. But there has been a federal court case - unrelated to the thrift bailout - ordering creditors of a cloth-printing company in Georgia to pay for cleaning up toxic wastes on the property.

In the case of the bailouts, Resolution Trust is the creditor, and the federal Environmental Protection Agency could sue it to force cleanup. In other words, Uncle Sam would sue himself. And you know who pays Uncle's bills.

Meanwhile, the Federal Deposit Insurance Corporation also owns about 270 assets, valued at a total of $365 million, with problems involving hazardous substances. A spokesman says the cleanup cost could be three times what the assets would sell for.

Sen. Jake Garn, R-Utah, is sponsoring a bill to limit the environmental agency's ability to sue lending institutions to recover the cost of toxic cleanups. That could save the Resolution Trust Corporation from having to pay out a lot of money. It wouldn't make those contaminated properties any easier to dispose of.

Moreover, the bill could give companies still in business a way to avoid complying with environmental laws; it would make banks and other lenders liable only if they knowingly failed to cope with hazardous waste while in control of the property. Lenders might decide that what they don't know about such problems would be less likely to hurt them.

There's a sad sort of symmetry at work here. Many environmental problems result from carelessness and a readiness to duck responsibility, especially if profit beckons. The problems are made worse if other parties, including government, are slow to react. These same factors were among those that contributed to the S&L scandal. Watchdogs are not always a popular breed. But society needs more of them, not fewer.

by CNB