WASHINGTON - The Resolution Trust Corp. said it would no longer allow business in default on loans from failed banks or thrifts to do work for the agency.

Under the new policy, large contractors will have to provide reports that their affiliated business are not in default to failed banks and thrifts. If such debts exceed $50,000, they can be banned from government contracting.

At present, contractors can be given special permission to do RTC business if an affiliate in default is "screened off" and not allowed to participate in RTC work.

The RTC also is imposing new restrictions on companies engaged in litigation with the government.

"We will be examining our business relationships and will expect contractors whose related entities may have caused losses to financial institutions to satisfy those obligations is they desire to do business with the RTC," said RTC president Albert Casey.

The RTC has been accused of hiring contractors who benefited from thrift failures and who then do business with the thrift cleanup agency.

The RTC also said it would review contractors doing RTC business who are named in significant lawsuits.

The agency will consider the number of lawsuits, the amount claimed, and the type of misconduct alleged.

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