Investigators Blame RTC for Poor Record in Texas
WASHINGTON (AP) _ Regulators with the Resolution Trust Corp. testified that mismanagement and ineptitude within the agency caused an abysmal record in collecting money from failed Texas S&Ls.
The House Banking subcommittee on general oversight and investigations heard Monday from current and former regulators at the Dallas office of the RTC. They labeled a 1994 RTC report that absolved the agency of major problems a whitewash.
Roger Altman, the former acting RTC chief who commissioned the report, was to testify before the panel today.
Those speaking Monday, including current RTC Dallas staffers who were issued subpoenas, agreed that the failure of Washington to coordinate with the field offices was one reason for the failure to recover money from savings and loan businesses that collapsed in the 1980s.
They also said that with only six months left on a six-year mandate, there was little chance of further legal action against those who had defrauded consumers of billions of dollars.
Texas thrifts account for $26 billion of the $95 billion already lost as a result of S&L failures, and it’s estimated that of $3.7 billion in losses from insider fraud nationwide, $2.1 billion resulted from activities in Texas. But so far the RTC has recovered only $35 million from Texas insiders.
``I have investigated cases of financial fraud most of my adult life and have never seen or heard of an organization that pursued financial fraud by not following the money trail,″ said William Depugh, a former RTC attorney in Dallas. ``Civil fraud cases and penalty potential were ignored. The result was inefficiency, unfairness and poor results.″
Washington, said Dallas RTC investigator Larry D. Boren, ``has failed completely in fulfilling its duties.″
RTC spokesman Steve Katsanos told The Associated Press that one reason for the poor record in Texas was that the state’s laws make it very difficult to attach someone’s personal property. ``It’s very defendant-friendly and very difficult to win cases,″ he said.
Five current Dallas investigators all said they were dissatisfied with the 1994 review that concluded there was no ``wide-ranging failure to pursue professional liability claims in Texas.″
``They did not look at a single file in the office,″ said Tammy Chiles-Hurst.
Subcommittee Chairman Spencer Bachus, R-Ala., said he thought it was ``truly puzzling″ that the review team reached its conclusions after only five days of interviews in Dallas without any review of case files.
Former Dallas attorney Thomas Burnside said he thought it was no coincidence that the report downplaying RTC problems came out around the same time Altman and the RTC were under fire for Altman’s contacts with the White House over another failed S&L, Madison Guaranty in Arkansas, which is part of the Whitewater land deal probe.
Burnside noted that the agency issued only 16 subpoenas in the first three years of investigating 86 Texas S&Ls with losses of $16 billion.
He said that since Congress voted in 1993 to extend the RTC mission for two more years, the agency has not filed one Texas fraud or intentional misconduct act case.