WASHINGTON -- Albert V. Casey, president of the Resolution Trust Corp., denied charges that he has dropped lawsuits and other legal actions for political reasons.

"These assertions are without merit," Mr. Casey said Thursday to members of the Senate Banking Committee, which has been holding hearings on the performance of the agency.

At an August hearing, three RTC lawyers charged that the agency went easy on politically well-connected people caught up in thrift failures.

Affect of Charges on Funding

Congressional Democrats seized on the charges in stepping up attacks on President Bush's handling of the S&L bailout. The charges have also been a factor in Congress' refusal to allocate funds for the RTC to complete its work.

"Many of the assertions made by some of the witnesses at the hearing were seriously misleading," Mr. Casey said.

Sen. Donald Riegle, D-Mich., said a recent consolidation of the agency has resulted in the dropping of cases, as has infighting among staff members.

"This turmoil has had a substantial adverse impact on the RTC's civil litigation efforts," he said.

High-Priced Lawyers

Sen. Howard Metzenbaum, D-Ohio, blamed Mr. Casey for squandering taxpayers' money by hiring outside law firms -- in one case for up to $600 an hour on a contingency basis for litigation against Drexel Burnham Lambert and junk bond king Michael Milken.

The Ohio senator also blasted the agency for selling Texas-based Bluebonnet Savings Bank, a branch of a failed S&L with $426 million in deposits, last April.

Sen. Metzenbaum accused Bluebonnet's owner, James Fail, of failing to disclose past legal problems when he purchased Bluebonnet from the federal government in 1988. The information would have disqualified him. Mr. Fail said the omission was inadvertent.

But at a break in the hearing, an RTC official said it is the regulators' job, not the RTC's, to approve S&L acquirers.

"When Mr. Casey came to office, I though it was great," Sen. Metzenbaum said, adding that the RTC chief has not lived up to his expectations.

Mr. Casey, a former head of American Airlines, acknowledged there have been some problems consolidating the agency from 15 offices to six, but he said the effort to catch wrongdoers has been "strengthened" in recent months.

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