S&L Bailout Agency Assailed by Congress Watch
WASHINGTON (AP) _ A consumer organization on Wednesday called for the overhaul of the agency overseeing the savings and loan bailout, saying it was prolonging the recession and could itself become a financial disaster.
Public Citizen’s Congress Watch, a consumer and environmental advocacy group founded by Ralph Nader in 1973, charged the Resolution Trust Corp. with mismanaging the thrift bailout and unnecessarily costing taxpayers billions of dollars.
Its 50-page report was titled, ″Beyond the Botched Bailout; Restructuring the Resolution Trust Corp.″ It included more than a dozen ″reforms designed to hold the RTC more accountable to the public, minimize the cost ... and ensure that the RTC better manages the assets of failed thrifts.″
The report was released the day before the House Banking Committee was scheduled to begin debate on a bill that would provide another $25 billion for the S&L bailout. Congress so far has give the RTC $105 billion to pay off depositors of failed thrifts.
″This is not a credible critique,″ replied RTC spokeswoman Felisa Neuringer. ″Some of these issues were dealt with a year or more ago. It appears they were rushing to get this out corresponding with the committee meeting.″
Sherry Ettleson, one of the report’s authors, said the S&L bailout ″has been plagued by mismanagement, escalating costs and poor record-keeping. The federal government’s response to the S&L crisis is threatening to become a second financial disaster.
″The RTC’s efforts to flood the market with real estate are helping to prolong the recession,″ she added. ″Congress should not be authorizing any more money for the bailout without reforming the RTC,″
Co-author Patrick Woodall said since the RTC controls $90.9 billion in real estate assets, more than any other single entity in the country, its actions affect the rest of the real estate market and the economy itself.
″By relaying on scheduled markdowns and bulk sales of property, the RTC is losing 40 cents on every dollar, forcing local real estate values down and adding to the already huge cost of the S&L rescue effort,″ he contended.
Neuringer disputed the $90.9 billion figure, saying the value of real estate controlled by the RTC is only $16 billion. And she said the agency has been responsible in not disrupting the real estate market.