Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, March 14, 1991 TAG: 9103140163
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The key 213-197 vote came 24 hours after the House, rebelling against leaders of both parties, rejected four separate proposals for financing the bailout. After accepting the compromise, the House then passed the amended bill by a 192-181 margin.
Negotiators will work out minor differences between the bill and a version passed by the Senate last week.
"It's the easiest thing politically to say `damn the S&L scandal,' " said Rep. Henry Gonzalez, D-Texas, chairman of the Banking Committee, in pleading for support of the compromise. "But we have no choice."
Failure to continue paying for the bailout, he said, would bring disaster and "invite a run on our financial institutions."
"If there has been one action that has outraged Americans from Maine to California, it has been the S&L fiasco," said Rep. Bernard Sanders, I-Vt. "I'll be damned if I will vote for a bill that will stick it to the working people" to pay for a bailout they did not cause, he said.
The compromise omitted provisions backed by liberals, including a goal of having 25 percent of the contracts awarded by the bailout agency, the Resolution Trust Corp., earmarked for companies owned by women and minorities.
Instead, it simply requires the agency to make public reports on its performance in hiring and contracting with minorities and women.
It also sets goals for the corporation in selling real estate and other assets inherited from thrifts, and in managing insolvent thrifts. The agency would be required to report on its progress before asking for more money.
The compromise was worked out by Gonzalez; Rep. Chalmers Wylie of Ohio, senior Republican on the Banking Committee; House Speaker Thomas Foley; Republican leader Robert Michel and Treasury Secretary Nicholas Brady.
The purpose of the money is to protect depositors in failed S&Ls, but Congress' balkiness at providing it does not immediately threaten deposits in the 192 insolvent thrifts under government control.
The trust corporation typically raises cash to meet depositors' demands by selling seized institutions' most readily marketable assets. If that fails, it has a $5 billion line of credit with the Treasury. It also can ask the Federal Home Loan Bank or the Federal Reserve system for an emergency loan.
In the long run, if Congress continued to withhold funding, it would call into question the so-far ironclad federal pledge to protect deposits up to the $100,000 insurance limit.
The practical effect of the wrangling is to increase the cost of the bailout as insolvent institutions continue to pile up operating losses.
Stephen Katsanos, a spokesman for the trust corporation, said the agency has shut down or rescued 373 institutions with the $50 billion provided by Congress in August 1989.
But, he said, the agency now has only enough money to deal with one more S&L, probably this week.
by CNB