Seidman to suggest limiting FDIC's role in S&L bailout; changes would start with new chairman.

Seidman to Suggest Limiting FDIC's Role in S&L Bailout

Changes Would Start with New Chairman

WASHINGTON -- L. William Seidman, chairman of the Federal Deposit Insurance Corp., will suggest Friday that Congress limit his agency's future role in the savings and loan bailout.

The major policy change would kick in after Mr. Seidman's FDIC term expires in October.

This scheduling would allow the agency and its new head to concentrate on major problems in the banking industry.

The FDIC refused to release copies of Mr. Seidman's testimony in advance of his appearance before the Senate Banking Committee. The New York Times reported Wednesday that it had obtained a draft copy spelling out the proposed restructuring.

|Very Rational Strategy'

FDIC spokesman Alan Whitney said the FDIC was not leaping from a sinking ship. Mr. Whitney said the FDIC had accomplished its assigned task of starting the Resolution Trust Corp. and its bailout-management program from scratch.

Mr. Seidman also serves as RTC chairman.

Not everyone agrees that the FDIC is in a position to let the RTC go.

"It sounds like they [the FDIC] are parachuting out and watching the RTC drift out to sea," said Robert Litan, a senior fellow with the Washington-based Brookings Institution. "That is a very rational strategy."

RTC May Need More Money

Congress has been criticizing the RTC for spending more money than ever anticipated to dispose of assets from failed thrifts.

Mr. Seidman is expected to tell the Banking Committee the bailout agency may need another $80 billion in September to keep running, depending on how many saving and loans fail. That would be $30 billion more than Treasury Secretary Nicholas Brady is expected to request later this month.

Mr. Seidman in the past has urged Congress to give the current bailout-agency structure more time to work. But if they must fiddle, he prefers they use his blueprint.

The Treasury Department prefers that Congress not fiddle with the RTC at all.

Seidman's Proposed Changes

Among the changes that Mr. Seidman will recommend are:

* Creating a single, nine-member board for the RTC, with the FDIC having three of the seats. The RTC currently has two boards: one composed of the FDIC board's five members; and an oversight board composed of the secretaries of Housing and Urban Development and Treasury, the chairman of the Federal Reserve Board, and two presidential appointees.

* Requiring the president to appoint the RTC's chief executive. David Cook now holds that post.

* Creating a three-person executive committee made up of the RTC's chief executive and officials from the FDIC and Treasury to act on behalf of the board in emergencies.

"This seems to me a convoluted way of preserving the FDIC's authority without responsibility," said Karen Shaw, president of the Institute for Strategy Development, a Washington-based consulting firm. "I don't think the Congress should fall for it."

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