WASHINGTON - The end of the Resolution Trust Corp. era is at hand.
Any thrift failure that occurs after midnight Saturday will be the responsibility, not of the taxpayer-funded RTC, created in 1989 to clean up the savings and loan collapse, but of the industry-funded Savings Association Insurance Fund.
Last week, John E. Ryan, the RTC's acting chief executive, told the Senate Banking Committee that regulators have identified four thrifts with a total of $2 billion of assets as "likely failures." He said they could end up in the hands of either the RTC or the Federal Deposit Insurance Corp., which administers the thrift insurance fund.
"That uncertainty will obviously be removed in a matter of days," Mr. Ryan added.
The uncertainty is a matter of more than passing concern because the thrift fund is, in the words of FDIC Chairman Ricki Helfer, "grossly undercapitalized."
The fund now contains $2.2 billion - $6.5 billion less than the level considered adequate by regulators and Congress. The contrast between it and the healthy Bank Insurance Fund is a political problem that Congress, regulators, and the industry have yet to resolve.
The failure of four thrifts with $2 billion of assets would not bankrupt the thrift fund. But with the loss rate on assets of failed institutions averaging 12% to 15%, they could take a $300 million bite out of it.
"The significance from our standpoint of the June 30 deadline is that for those institutions we have decided to close, there is a clear advantage in light of the weakness of SAIF to close those institutions before June 30," said Jonathan Fiechter, acting director of the Office of Thrift Supervision, who makes the final decisions on if and when to close troubled thrifts.
Mr. Fiechter, who is willing to venture only that "less than half a dozen" thrifts are on the verge of closing, said the June 30 deadline would have no effect on whether a thrift would be closed, only on when. He said his agency usually makes the decision to close an institution a month or two before the closing actually takes place.
The office has closed two thrifts so far this year, and closed two in 1994.
While Mr. Fiechter's words indicate that, all else being equal, his agency will lean toward closing thrifts before Saturday's deadline, there is another school of thought on this matter.
Warren Heller, director of research at Veribanc Inc. in Wakefield, Mass., said many of the analysts he talks to assume Mr. Fiechter will wait until after the deadline to close thrifts in order to throw the savings fund into a minor crisis and force Congress to act on the disparity between the bank and thrift funds.
"Unless there's some reasonable degree of pressure on Congress, Congress won't move," Mr. Heller said.
Responded Mr. Fiechter: "Chairman Helfer and I and Treasury are working very hard to prevent such a disaster from occurring. Causing the problem we're trying to prevent would be curious."
Since its inception in August 1989, the RTC has refunded assets totaling $465 billion to insured depositors of 747 failed thrifts. It still has on its hands about $20 billion of thrift assets, most of them considered hard to sell.
The agency's work is expected to end up costing taxpayers about $90 billion - $15 billion less than the amount authorized by Congress. It is due to be absorbed by the FDIC Jan. 1, 1996.
