Brady Opens Search for RTC Executive
Asks Senate Panel for $80 Billion in New Funds to Cover S&L Losses
WASHINGTON -- The search is on for a chief executive officer to oversee the savings and loan industry bailout, Treasury Secretary Nicholas Brady said on Wednesday.
In testimony to the Senate Banking Committee, Mr. Brady endorsed the idea of transferring day-to-day management of the Resolution Trust Corp. to a strong chief executive "with the credentials and the operating latitude to get this job finished." He said the shift would ease pressure on the Federal Deposit Insurance Corp., whose board and staff manage the bailout.
Some names being floated for the job include Gerald Greenwald, a former colleague of Mr. Brady's at the New York investment banking firm of Dillon Read & Co., and David O. Maxwell, the former chairman of the Federal National Mortgage Association. Neither could be reached for comment.
Mr. Brady coupled his recommendations with requests for $80 billion in fresh funds to cover savings and loan industry losses, a sum that would raise the bailout cost to $160 billion. And he requested $35 billion in new borrowing authority for working capital, bringing total borrowings to $160 billion by mid-1993. Virtually all borrowings will be recovered, Mr. Brady said.
"If the real estate industry sinks into an abysmal mess," Mr. Brady added, the costs "could go higher." But this is unlikely, he said.
He also asked the committee to allow the RTC to continue accepting cases until Sept. 30, 1993. Under existing law, the agency is required to stop taking cases on Aug. 9, 1992.
Calls for Change
In recent weeks, members of Congress have been demanding new management and a stream-lined bureaucracy in exchange for new bailout funds. In the face of this pressure, FDIC Chairman L. William Seidman last week advanced the idea of appointing a strong chief executive for the RTC. He also proposed to overhaul the RTC's governing structure, which now splits authority between the RTC board of directors, identical to the FDIC board, and a cabinet-level oversight board.
But Mr. Brady balked at the idea of a radical overhaul of the RTC bureaucracy, saying such restructuring would be disruptive, costly, and demoralizing.
Democratic senators said they would not vote for additional funds until the RTC structure is overhauled.
The bailout funding request ignited partisan bickering as well. Sen. John Kerry, D-Mass., said he believed presidential election politics kept the S&L crisis out of the public eye in 1988, and wondered whether the Bush administration was low-balling its estimates with an eye toward the 1992 elections.
Mr. Brady appeared infuriated. His voice quavering, he told Sen. Kerry: "I resent your insinuation that we are playing politics with this program."