White House Accepts Plan To Restructure the RTC
Power Would be Shifted to Head of Agency
WASHINGTON - Bowing to congressional pressure, the Bush administration agreed on a restructuring plan for the Resolution Trust Corp. that would enhance the authority of the bailout agency's chief executive.
The proposal was presented to a House Banking subcommittee on Thursday by RTC Chairman L. William Seidman. Deputy Treasury Secretary John Robson gave an unenthusiastic endorsement, insisting that the administration still believes that restructuring is unnecessary.
"We are not unmindful of the feelings here," Mr. Robson told the banking panel. "So I sat down with Bill and said, |If we are going to get hit by a truck, what kind of truck do we prefer?'"
Overhaul Likely This Year
Treasury's willingness to compromise is the strongest signal yet that the cumbersome management structure created for the thrift-bailout agency in 1989 will be overhauled this year.
The administration is asking Congress to authorize $80 billion in new funding to cover losses at failed thrifts, as well as $35 billion in working capital, which the administration believes will be repaid as assets are sold.
However, a number of members of the financial institutions subcommittee said on Thursday that they are unwilling to provide new money to the RTC unless the agency is overhauled to ensure that it is performing as efficiently as possible.
Rep. Joseph P. Kennedy 2d, D-Mass., called the agency "the last of the Soviet-style bureaucracies," and Rep. Jim Bacchus, D-Fla., said he is so disturbed by what he said was the "lack of accountability" at the agency that he plans to offer his own restructuring plan.
|You Have All Failed'
"As far as I can see, you have failed, and I will do all I can now to stand up for the taxpayer," he said.
The administration's initial approach of maintaining the status quo received a lukewarm endorsement from Rep. Charles Schumer, D-N.Y., who said Congress must balance the deficiencies of the existing RTC structure against the need for stability at the two-year-old agency.
Under existing law, the Federal Deposit Insurance Corp. serves as the exclusive manager for the day-to-day operations of the RTC. It reports to an Oversight Board chaired by the Secretary of the Treasury.
The legislation submitted by Mr. Seidman would eliminate the FDIC's role as manager of the RTC. It calls for a chief executive officer, with powers similar to those of a corporate CEO, to be appointed by the Oversight Board. The CEO would be nonvoting chairman of the Oversight Board.
Mr. Seidman told they panel he is optimistic that the $80 billion for losses contained in their funding request will be the last such request the agency makes of Congress. "I think it is a conservative estimate," he said.
Price Tag Elusive
But Mr. Robson warned that "until the last asset is sold, we won't know" the total cost of the bailout. Congress has already given the RTC $80 billion to cover losses, and the last of that money is expected to be spent by the end of this month.
Most members of the banking panel said they saw no choice but to approve the funding. However, Rep. Frank Annunzio, D-Ill., plans to remain a holdout.
"How much is $80 billion?" he asked. "It is enough to fund the National Cancer Institute for 47 years. It is enough to buy almost 800,000 houses at today's median home price."