Seidman Says Top Manager At RTC Needs More Power
WASHINGTON -- Resolution Trust Corp. Chairman L. William Seidman told Congress on Friday that the agency's top day-to-day manager needs more authority and a clearer chain of command to oversee the thrift bailout.
The regulator called for creating the post of chief executive officer to "provide one identifiable individual who would be accountable to Congress and the administration." Mr. Seidman's remarks, to the Senate Banking Committee, were consistent with an outline of the proposal that was leaked to the press last week.
Cooke Is Current Chief
The RTC is currently managed by Executive Director David Cooke, a career bureaucrat who reports to two boards of directors.
Under Mr. Seidman's plan, President Bush could name a new chief executive with far more authority. Mr. Seidman, who is also chairman of the Federal Deposit Insurance Corp., said candidates from inside the RTC as well as the private sector should be considered.
Mr. Seidman's recommendations were generally well received by the senators. Impatient with the RTC's progress, members of Congress have been demanding fresh faces and a streamlined bureaucracy in exchange for additional cash infusions.
"We've reached a point where sensible restructuring is in order," said Sen. Donald Riegle, D-Mich., the committee chairman. "Otherwise, the support won't be here for the next funding round."
"This is an absolutely colossal, costly undertaking that has been exacerbated by the lack of sound management," said Sen. Alfonse D'Amato, R.-N.Y.
Who Wants the Job?
But people familiar with the thrift bailout agency wonder who would be willing to take what is perceived as a no-win job.
Daniel Kearney, recruited from Wall Street in 1989 to be chief executive of the RTC Oversight Board, quit in disgust over red tape. And Democrats in Congress who view the RTC's lackluster performance as a political issue, are likely to be tough overseers of anyone in charge.
Mr. Seidman said constant criticism and second-guessing from Congress are hurting morale at the RTC. "Good people are working long hours, and doing not only their best but very well," he said. "We can't afford to demoralize or lose them."
The FDIC chief also called for an overhaul of the RTC's regulatory structure, which now splits authority for the S&L cleanup between the RTC board - the FDIC's alter ego - and an Oversight Board, a cabinet-level panel.
It would be impossible to install a strong chief executive under the current structure, he said. "There will always be this problem of who's responsible for what."
Mr. Seidman coupled his pitch for RTC reorganization with an estimate that $80 billion in additional funding would be needed to complete the S&L cleanup.
Mr. Seidman's frustration with explaining why the agency loses money reached a flash point in an exchange with Sen. D'Amato.
When Mr. Seidman noted that the RTC had just priced its first issue of mortgage-backed securities, Sen. D'Amato inquired, "Will you sell them at a profit?"
"We've never sold anything at a profit that I'm aware of," Mr. Seidman replied.
"That's an interesting admission," Sen. D'Amato responded.
"We didn't create this," Mr. Seidman answered.
Mr. Seidman urged the Bush Administration to launch its search for an RTC chief executive immediately but denied news reports that the overhaul is designed to oust his protege, Mr. Cooke.
PHOTO : David Cooke Effort to oust him denied