GAO Says S&L Bailout Cost Underestimated
Slow Pace of RTC Sales Could Raise Price Through '92 to $150 Billion
WASHINGTON -- Charles Bowsher, the U.S. comptroller general, said on Tuesday that the cost of the savings and loan bailout through 1992 is likely to exceed the $130 billion maximum estimate by the Bush administration.
Mr. Bowsher, who heads the General Accounting Office, told the Senate Banking Committee that sales of failed thrifts have been slower than expected and proceeds from the sales of thrift assets by the Resolution Trust Corp. are likely to be lower than anticipated.
"You are looking at $150 billion through 1992 -- in the ballpark," Mr. Bowsher said. That means Congress would have to appropriate $50 billion to $75 billion for 1992 bailout efforts.
The oversight board that sets policy for the RTC has estimated the savings and loan cleanup cost at $90 billion to $130 billion in constant dollars. But other estimates have ranged as high $500 billion, including interest.
The General Accounting office has criticized the RTC for inadequate management and tracking of its thrift assets. Because of information-reporting problems, the GAO will not complete its annual audit of the RTC by the June 30 deadline, Mr. Bowsher said.
Congress has provided the RTC with $80 billion for the thrift cleanup. The Senate Banking Committee chairman, Donald W. Riegle Jr., D-Mich., said the agency will require at least another $50 billion but will not get it without "some significant management improvements."
The RTC has been borrowing money for working capital, which it uses to dispose of assets from seized thrifts. The agency lost $6 billion in working capital in 1990, Mr. Bowsher said. He told reporters that the loss is not included in the total cost estimate of $150 billion, which will have to be funded by Congress.
The RTC said that as of May 28 it held $112.2 billion of assets in conservatorship, up from $93 billion on March 31. Single-family mortgages accounted for $27.5 billion of the total. Other mortgage loans came to $21.1 billion, cash and investment-grade securities to $17.9 billion, nonmortgage loans to $8.8 billion, mortgage-backed securities to $14.2 billion, and noninvestment-grade securities to $2.4 billion.
The RTC had another $68 billion in thrift assets in receivership on March 31. A May figure was not available.