WASHINGTON -- Treasury Undersecretary John Robson, acting to speed up congressional approval of thrift cleanup legislation, yesterday promised lawmakers that a formal request for action on the bill will be sent shortly to Congress.
Mr. Robson's statement came soon after Rep. Frank Annunzio, D-Ill., the chairman of the House Banking Committee's financial institutions subcommittee, said his panel would not authorize more money for the thrift rescue unless the Treasury Department submits a formal request.
Officials of the Resolution Trust Corp., the government agency empowered to close insolvent thrifts and dispose of their assets, and the Treasury Department repeatedly have stated the RTC will need another $80 billion to complete the task of weeding out dead institutions. But they have not sent a letter to House Speaker Thomas S. Foley, D-Wash., or Senate Majority Leader George J. Mitchell, D-Maine, requesting passage of the necessary legislation.
A similar standoff last year between the Bush administration and Congress left Resolution Trust short of cash earlier this year. After lengthy wrangling, Congress approved a bill providing the agency with an additional $30 billion, which all those involved agreed would merely tide the agency over into the fall.
"Mr. Chairman, I'm not going to argue with you," Mr. Robson told Rep. Annunzio yesterday at a House subcommittee hearing. "The Treasury secretary was here in July, and he told you what is needed. But if you need a formal letter, we'll get you one."
According to Mr. Robson and L. William Seidman, chairman of the Federal Deposit Insurance Corp. and an attendee at yesterday's meeting, the $80 billion currently being requested by the Bush administration is sufficient to complete the task of closing all of the nation's insolvent thrifts.
But the two officials stressed that estimates are difficult to make, and the only assurances they could provide panel members that their current funding request would be their last was that they attempted to use a worst-case scenario in drawing up their potential funding needs.
Rep. Bruce Vento, D-Minn., said, however, that Resolution Trust may not have been stringent enough in its analysis. He said the agency's funding request is based on an assumption that it will need to process about 300 thrifts.
But the Congressional Budget Office foresees the possibility that as many as 900 thrifts may fail, he said.
"We should be mindful of the fact that the CBO estimates have been more accurate than the administration's," Rep. Vento said. "The administration has underestimated the extent of this bailout every step of the way."
Congress in 1988 provided $10.8 billion for the cleanup effort, approving a plan to create the Financing Corp., which issued bonds to be paid off by assessements on the thrift industry.
When that money ran out, Congress in 1989 created the Resolution Funding Corp., which issued $30 billion of bonds to be paid off by the thrift industry. An additional $20 billion of Treasury borrowing was provided. And earlier this year, Congress authorized the Treasury Department to raise another $30 billion for the thrift cleanup effort.
That money is expected to be depleted by the end of October, prompting the request for another $80 billion -- a figure Rep. Annunzio said was enough to fund the National Cancer Institute for 47 years.
Though approval of the funding is considered probable, it is likely to come at the expense of Resolution Trust management reforms that members of Congress believe will increase the agency's efficiency. Similar reform efforts have been resisted by the administration in the past, but Mr. Robson indicated a willingness to compromise on the issue in his testimony yesterday.