Congressional Unit Sees Rise In Bailout Cost
WASHINGTON -- The Congressional Budget Office has concluded that the thrift cleanup will cost more and take longer than the administration anticipates.
In testimony prepared for a presentation Tuesday before a House Banking subcommittee overseeing the Resolution Trust Corp., Robert Reischauer, director of the budget office, said its present-value cost estimate for the cleanup, in constant 1990 dollars, is $155 billion.
The Bush administration's estimated range is $90 billion to $130 billion, in 1989 dollars.
Estimates of Losses
Mr. Reischauer said that in nominal, or budget, dollars his office foresees $191 billion in losses, compared with the $160 billion that the administration estimates losses might reach.
He noted that the administration is requesting $80 billion in new financing to cover losses involving failed thrifts, and that it expects $50 billion will be needed in fiscal 1992, which begins in two weeks.
The Congressional Budget Office, he said, expects that about $90 billion will be needed for fiscal 1992, though the amount could vary by several billion dollars in either direction.
Mr. Reischauer emphasized that all the estimates are uncertain and depend on numerous variables, including economic conditions and availability of funding.
Over the last year, the budget office has reduced to 1,500 from 1,700 its estimate of how many thrifts will become insolvent and require merger or closure over the next four years.
Charles Bowsher, chief of Congress' General Accounting Office, who also testified Tuesday, said no one should be "lulled into thinking that providing an additional $80 billion to the RTC today guarantees an end to RTC funding requests."