Ability to Shut S&Ls; May End Soon, Regulator Says
Its funds continuing to dwindle at a sharp rate, the Federal Savings and Loan Insurance Corp. may run out of the money it needs to close or sell off troubled savings and loan firms by early next year, the nation’s chief S&L; regulator said in an interview Tuesday.
Federal Home Loan Bank Board Chairman Edwin J. Gray said it could be the end of January before the FSLIC no longer has the money it needs to resolve the problems of ailing savings and loans.
That is when the value of the FSLIC’s principal fund, known as its primary reserve, is expected to fall to about $1 billion from its present $2.7 billion, Gray said in an interview with several reporters after a speech he gave here to a convention of savings and loan executives.
Gray said he will not allow the fund to fall below $1 billion. “That would be imprudent,” he said.
Thus, Gray confirmed, it is “quite possible” that the FSLIC will be forced into a do-nothing stance this winter while it awaits another congressional recapitalization attempt.
According to Gray, it will be March at the earliest before Congress could pass such legislation. A previous attempt to pump as much as $15 billion into the FSLIC narrowly failed last month in the dying moments of the 99th Congress.
The FSLIC, an arm of the Home Loan Bank Board, acts as receiver for and liquidator of failed savings and loans. It also insures customer savings up to $100,000 per account should a savings and loan company fail.
