Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, July 31, 1990 TAG: 9007310105
SECTION: NATIONAL/INTERNATIONAL PAGE: A-2 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The proposal, which would postpone action on the larger appropriation until after the November election, was raised by Treasury Undersecretary Robert R. Glauber.
He told the House Banking Committee that $5 billion to $10 billion would keep the bailout going through January or February. He stopped short of endorsing the idea.
The apparent trial balloon was floated as committee members noted angry voters are pressuring them to oppose more bailout funding.
"Perception is reality . . . and it's the perception on the part of the American people - `Give me a break, I'm not paying,' " said Rep. Mary Rose Oakar, D-Ohio.
Rep. Toby Roth, R-Wis., predicted Congress would not agree to more money for the S&L bailout.
The administration is not disputing regulators' estimates that as much as $100 billion in new bailout money is needed for all of 1991.
Glauber said the stopgap plan also would have to include an administration proposal to exploit an error in last year's bailout bill that would allow $18.8 billion more in bailout borrowing than Congress originally intended.
The S&L bailout is an important issue in budget summit talks between the White House and congressional leaders, who are trying to fashion a package before Congress leaves Washington in October to campaign.
The stopgap plan would let Congress and the administration postpone until next year long-term funding for the Resolution Trust Corp. (RTC), a year-old agency created to close and sell failed thrifts, along with a proposal to reform the deposit insurance system.
Glauber also repeated two previous alternatives: giving the administration unlimited authority to spend whatever is needed to finish the bailout or providing what is needed for 1991.
RTC Chairman L. William Seidman told the panel his agency would need to spend $80 billion to $100 billion in fiscal year 1991, including $30 billion to $40 billion from taxpayers to cover S&L losses. That's in addition to the $50 billion authorized in the 1989 bailout bill.
The trust corporation would need to borrow another $50 billion to $60 billion, which would be repaid as the government sells real estate and other assets inherited from failed thrifts.
Another installment on the bailout will be needed in 1992, Seidman said.
"Eighteen months from now, we will have a good hold on the overall look of things, but this is a moving target," he said.
By the end of September, the RTC will have spent $97 billion - $37 billion to cover losses and the rest to pay for S&L assets which will be sold, he said. The agency will need more money early in the October-December quarter, he said.
Glauber, in response to a question from Rep. Henry B. Gonzalez, D-Texas, the committee chairman, refused to say how much the administration wanted appropriated for S&Ls in 1991.
He warned that failure to act could erode depositor confidence and push up the ultimate cost of the bailout by keeping money-losing institutions open.
by CNB