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

DATE: TUESDAY, July 31, 1990                   TAG: 9007310482
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A/1   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

FDIC CHIEF SAYS INSURANCE FUND UNDER STRESS

William Seidman, chairman of the Federal Deposit Insurance Corp., said, "We may well have another loss in the current year."

He told the Senate Banking Committee the loss Governors want panel to probe S&Ls. A2 could drop reserves in the fund to between 50 cents and 60 cents per $100 in bank deposits.

Speaking to reporters during a break in the hearing, Seidman said "it would not be unreasonable" to predict a $2 billion loss in the bank insurance fund, lowering reserves to roughly $11 billion.

The fund has lost money in every year since 1988, when it began with reserves of $18 billion. The fund is declining despite increases in the insurance premiums paid by banks.

Seidman said after a review of more than 1,000 problem banks in the country his agency believes the fund is still adequate to handle bank failures.

"At this point we believe we can handle anything we can see," he said.

Seidman, who also chairs the Resolution Trust Corp., said the S&L bailout agency would need to spend $80 billion to $100 billion in the next fiscal year, starting Oct. 1.

That includes $30 billion to $40 billion from taxpayers to cover S&L losses, on top of the $50 billion authorized in the 1989 bailout bill.

But a Bush administration official said Monday that Congress could avoid voting on a $100 billion savings and loan bailout for 1991 until next year by passing a stopgap bill for no more than $10 billion.

The proposal, which would postpone action on the larger appropriation until after the November election, was raised by Treasury Undersecretary Robert 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 that 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.