Vartanian's Tonic for S&L Industry

American Banker: Was the 1989 thrift bailout bill a mistake? Thomas P. Vartanian: The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and the Resolution Trust Corp. were basically sound ideas. Where the train left the track is that the plan should have been phased in over a longer period - five, 10, or 15 years. AB: Why drag it out? TPV: It would have been more feasible in terms of the government's resources and capabilities, so that we didn't have 1,000 institutions and $500 billion in assets sitting there at one time. AB: Wouldn't losses have grown if the S&Ls were given more time? TPV: Forbearance has been a part of banking as long as there's been banking. What the FDIC and the FSLIC did in the 1980s was to manage the crisis.

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