RTC Aims to Sell 80 Thrifts Under Accelerated Program
WASHINGTON - The Resolution Trust Corp. plans to liquidate or sell up to 80 troubled savings and loans between now and April 1 - an ambitious program that will exhaust the lion's share of the $25 billion in funding provided by Congress last week.
One big surprise is the RTC's decision to spend a substantial portion of its new money to market and sell about 43 savings and loans that haven't failed yet, under its Accelerated Resolution Program, or ARP.
Agency Goes on Offensive
The decision to dedicate so much money to that program signifies that the RTC is going on the offensive to keep thrifts from ever becoming wards of the government.
"Clearly we want to give the ARP program a substantial boost," said William Roelle, the RTC's deputy executive director in charge of resolutions. "There are 13 ARPs that we think we can get teed up right away."
There are about 30 more thrifts that could be put into the ARP program during the first quarter, he said. No final decision has been made on the exact number of S&Ls that the RTC intends to tackle, however. The RTC, along with the Office of Thrift Supervision, plans to detail its plans for the ARP program at a press conference this week.
Under that program, which is run jointly with the OTS, the government peddles troubled thrifts while they are still up and running. Regulators claim that thrifts sold through the program fetch a higher price because their franchise never suffers the taint of a government takeover.
In the 21 months since ARP was started, just 27 thrifts with $13 billion have been sold through the program. That's anything but accelerated, critics say.
But regulators still have high hopes for the program. OTS officials predicted in July 1990 that they could sell 70% of the thrifts headed for RTC through ARP, or 209 of the 299 thrifts it then considered likely to fail.
Another $55 Billion
The new banking bill passed by Congress last month provided the RTC with $25 billion in interim funding, which is expected to last only until April 1. Lawmakers pledged to consider additional funding for the thrift bailout, likely another $55 billion, when they reconvene in January.
Mr. Roelle says he wants to spend close to half the current funding closing about 40 of the 91 S&Ls in 34 states that are now run as government receiverships. Those 91 institutions have combined assets of $75.9 billion. California and Florida each have 10 thrifts under government control. Texas has seven.
Mr. Roelle declined to identify any of the institutions slated for sale but noted, "If they've been in conservatorship longer than six months, you can depend on those getting done during this period," Mr. Roelle said.
Cost So Far: $77.3 Billion
Since RTC was created in August 1989, the thrift-bailout agency has closed and either sold or liquidated 583 thrifts, with $201 billion in assets, at a cost of $77.3 billion.
There are 59 thrifts that have been in conservatorship longer than six months, including Amerifirst Bank in Miami, with $3.7 billion in assets; Far West FSB in Portland, with $2.7 billion; and Home Savings Association of Kansas in Kansas City, with $3 billion in assets.
Six of those 59 thrifts were taken over during 1990; the thrift that has spent the most time under RTC control is Franklin Savings in Ottawa, Kan., with $11.4 billion in assets, which was taken over on Feb. 16, 1990. Franklin, however, is not actively being sold because its owners are suing over the government seizure.
The accelerated program is aimed at thrifts in OTS's so-called Group IV, institutions that are likely to fail.
"We'd like to resolve most of the Group IVs going forward with ARP," a senior OTS official, who did not want to be identified, said Friday.
The OTS last week refused to provide an update on the number of institutions it has classified as Group IV. As of the second quarter, however, 118 thrifts, with $80 billion in assets, were in the Group IV category. In the third quarter, however, 37 of those thrifts were handed over to the RTC.
The largest thrift in the program right now is Perpetual Savings in Washington. The government expects to close a deal on the $3.4 billion-thrift by yearend.