WASHINGTON -- The Clinton administration has successfully turned back congressional attempts to reduce the thrift bailout agency's funding.
Jack Ryan, acting Resolution Trust Corp. chief executive, riled Congress last month when he said the agency would need just $5 billion of the $18.3 billion the administration wrangled out of lawmakers last year.
Mr. Ryan's prediction last week prompted two Republicans on the House Banking Committee to try to trim the RTC's funding with amendments to a Treasury Department and Postal Service appropriations bill.
Reps. Toby Roth of Wisconsin and Spencer Bachus of Alabama were defeated after the Clinton administration sent a strongly worded letter to House Rules Committee Chairman Joe Moakley, D-Mass.
"As [Treasury] Secretary Bentsen, the GAO [General Accounting Office], and other knowledgeable parties have noted numerous times, RTC's estimates of its losses are just that -- estimates," wrote Frank N. Newman, Treasury under secretary for domestic finance. "No one will know the actual amount of the losses until the last institution is closed and the last asset is sold, which could be years from now."
The Rules Committee, which schedules legislation for floor consideration, refused Rep. Roth's request to permit an amendment to the appropriations bill slashing RTC funding to $5 billion.
It also refused Rep. Bachus's requests for amendments that would delay the RTC's authority to spend any of its current funding and impose new restrictions on RTC paychecks.
A spokesman for Rep. Roth said he isn't likely to press further. "But this is something he hears about at every town hall meeting," the spokesman said. "He had to try."
Mr. Newman of the Treasury said in his letter, "While I understand the sponsors of these amendments may be trying to reduce government spending, we believe that these amendments will in fact increase the costs to the taxpayers." Previous funding delays costs taxpayers between $1 billion and $2 billion, he said.
Just an Estimate
On Friday, Mr. Ryan cautioned lawmakers not to pare down the $18.3 billion, warning that by the time the agency finishes its work, there could be "substantial variation" from his $5 billion estimate.
"It would make no sense for Congress to take the chance of increasing the final cost of the RTC's mission unnecessarily by reducing the existing line of credit provided by the Completion Act at this time," Mr. Ryan told House Banking Committee Chairman Henry B. Gonzalez in a letter.
Mr. Ryan's letter to the Texas Democrat noted that the RTC still has 23 thrifts in conservatorship with $10.7 billion in deposits. The agency also has more than $50 billion in assets to sell, he wrote, noting that many of these assets are hard to value because there is little market for them.
"Changes in economic conditions, unanticipated additional savings and loan failures, and unforseen problems impacting the value of remaining assets or RTC liabilities are just a few of the factors that could cause substantial variation from current estimates," Mr. Ryan continued.
The thrift trade group breathed a sign of relief after the RTC funding amendments were blocked.
"We were really concerned," said Paul A. Schosberg, president of the Savings and Community Bankers of America. "This is not rocket-science stuff, and there remains sufficient uncertainty so that RTC should have use of the funds appropriated last year.
"I don't think that there should be a congressional initiative aimed at preventing the unnecessary use of funds because the underlying statute already assures that."
Thrifts also hope any unused RTC funds could later be added to the Savings Institution Insurance Fund. The fund could use the money as the thrift-industry is expected to face much higher deposit insurance premiums than banks over the next couple years.