Emergency Funding Proposed for S&L's
WITH the government's multibillion dollar effort to close down failed savings and loan institutions about to halt Tuesday, House leaders proposed an emergency funding bill to keep the thrift cleanup going.
By failing to approve more money for the Resolution Trust Corp. (RTC), Congress risks reneging on its promise for the first time since the Great Depression to reimburse small depositors at federally insured thrifts.
Without the money, insolvent thrifts could collapse and the government would have no cash available to cover insured deposits.
House Banking Committee Chairman Henry Gonzalez (D) of Texas, and the committee's senior Rep. Chalmers Wylie (R) of Ohio introduced a stripped-down RTC funding bill late Tuesday, saying it has the best chance for quick passage.
The leadership's last-minute move was forced by House Republicans, who had blocked action the past week on a banking committee bill approved earlier in the month.
The latest funding proposal could go for a vote on the House floor as early as Wednesday and then be reconciled with a broader Senate bill in conference committee, probably next week.
One problem with the House measure is that it would only keep RTC operating through September, forcing another decision on the thrift cleanup just before the election.
Representative Gonzalez' move was backed by House Speaker Thomas Foley and by the Bush administration, a senior aide said.
The bill would lift RTC's April 1 deadline to spend the $25 billion it was given last December. The agency has $17 billion left from that spending authority. The money is used to close down failed thrifts and pay off insured depositors. RTC staff and its sale of failed thrift assets is financed through another budget, so some of its operations can continue without more money.
Gonzalez and Representative Wylie said they favor an amendment that would bar regulators from using any RTC funds to pay off shareholders at failed thrifts rather than depositors.