Eased Regulations Doubled Cost Of the Thrift Bailout, Study Says

WASHINGTON -- Federal savings and loan regulators doubled the cost of the industry bailout by relaxing rules on capital and investments, according to a Congressional Budget Office report released Wednesday.

Failing to close thrifts as soon as they became insolvent cost $66 billion, the report said.

That is more than half of the $127 billion cost of bailing out 1,130 savings and loans, the CBO said.

The agency examined the amount regulators spent resolving thrifts that failed between 1980 and 1990, as well as those that it projects will fail this year.

Data Developed for Gonzalez

The budget office, an independent arm of Congress, developed the estimates for Rep. Henry B. Gonzalez, the Texas Democrat who heads the House Banking Committee.

He requested the report earlier this month, when the Office of Thrift Supervision and the Federal Deposit Insurance Corp. began considering a new round of regulatory easing to give troubled institutions time to recover.

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