ATLANTA -- The thrift bail-out caused a massive transfer of rural deposits to large financial institutions and hobble residential lending in the affected communities.

So claims a new report by the Southern Finance Project, a consumer advocacy group based in Charlotte, N.C.

"The entire thrust of federal policy as represented by Resolution Trust Corp. case resolutions is creating consolidation of rural savings and represents a net outflow of funds from rural uses to other uses," said research director Marty Leary, principal author of the report.

Vanishing Act

Mr. Leary reached his conclusion after surveying 620 rural counties in 14 southern states, including Texas. He found:

* Nearly half the South's rural thrift deposits came under government control between 1988 and 1991, affecting more than $5 billion in rural savings.

* Of $2.1 billion in rural deposits involved in RTC resolutions, 74% went to commercial banks. Fifty-eight percent went to banks or thrifts with more than $1 billion in total assets.

* S&L branch closings, mergers and charter changes were so common in poor counties that two-thirds of them hosted no thrifts at all by yearend 1990.

Shifting Commitments

"The anecdotal evidence that we collected, just talking to rural officials and rural residents, suggests that the institutions receiving deposits are not as committed to local residential lending as the institutions they replaced," Mr. Leary said.

The Southern Finance Project advocates establishing a network of "democratically owned development bank's" to focus on residential lending and other public objectives in rural areas..

Mr. Leary suggested these public banks could be owned by municipal agencies or emulate the original S&L concept of mutual ownership by depositors.

"It was partially because they got away from the mutual form that they were able to pursue such ruinous investment strategies," Mr. Leary said. His study was funded by the Ford Foundation and the Z. Smith Reynolds Foundation.

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