It is the financial system's toxic waste dump: Hundreds of crippled or failed savings and loan companies. As much as $50 billion in bad loans and assets.
The health of the entire S&L; industry is threatened and questions are being raised about whether the mess can be cleaned up before it completely erodes public confidence in that $1-trillion sector of the American financial network.
Like any toxic waste dump, the $50-billion S&L; problem is mired in controversy: Who is responsible for the cleanup? How can it be cleaned up? What will it cost? Most important, who will get stuck with the bill, the industry or the taxpayer?
Just last August, Congress authorized the industry's insurer, the Federal Savings and Loan Insurance Corp., to raise $10.8 billion through bond sales so the agency can close more ailing thrifts. But already there is escalating talk within the industry that the cleanup costs, running into many billions of dollars, will have to be borne by the taxpayer.
The savings and loan business has been in trouble ever since this decade began--at first suffering from huge losses sparked by soaring interest rates and later from poor-quality lending that was aided by bank deregulation and abetted by lax regulatory supervision.
Through the years, the industry has crossed its fingers, hoping that a better economy would wash away the mess. Meantime, the government has struggled to devise a cleanup plan of its own. The problem hasn't disappeared; it has gotten bigger.
This is shaping up as a critical year. At stake may be the survival of savings and loans--the country's principal source of mortgage money--as a distinct industry. Some believe that a taxpayer bailout of FSLIC--or a merger with its counterpart in the commercial banking industry--will signal the industry's eventual fade-out.
A Massive Problem
Count M. Danny Wall among the optimists. "For an industry that has been undergoing the difficulties that the thrift industry has, any period of time is critical," said the former Senate staff member who took over last June as chairman of the Federal Home Loan Bank Board, the parent agency of the FSLIC. "Hopefully, 1988 will be a turnaround year."
That would be a remarkable feat, given the grim facts:
- Between 320 and 490 of the nation's 3,200 thrifts are insolvent, depending on whose figures are used. The low figure, which equals 10% of the total number of institutions, is from the FSLIC's chief economist. The high number is from Donald M. Kaplan, a former Harvard Business School professor and a leading industry consultant. The federal General Accounting Office said last year that 445 thrifts with assets of $112.7 billion were insolvent.
- Failed thrifts are kept open, and continue losing money, because the FSLIC lacks the funds to close them and instead has engaged in holding actions that delay the day of reckoning. The failure rate in the 1980s, counting insolvent thrifts allowed to remain open, is greater than that during the Depression of the 1930s.
- Insolvent thrifts lost $6 billion in 1986--nearly $14 million a day. The losses outstripped the earnings of healthy institutions, which comprise the vast majority of the industry. And red ink is rising: In the third quarter of 1987, insolvent thrifts lost $2.3 billion; healthy ones earned $712 million.
- Cost projections for rescuing the industry range from $20 billion to $50 billion and come from such prominent experts as William M. Isaac, former chairman of the Federal Deposit Insurance Corp., which insures commercial banks. The costs are so high because closing a failed savings and loan requires the FSLIC to pay off depositors or provide financial assistance to new owners and absorb losses from the institution's bad assets, which often run into hundreds of millions of dollars.
Estimates of the cost of bailing out Financial Corp. of America, the parent of ailing Stockton-based American Savings & Loan, run from $2 billion to $4.5 billion. In Texas, where as many as one in four thrifts is mired in insolvency, the recent cost of disposing of Vernon Savings & Loan alone was $1.3 billion, the biggest rescue in FSLIC history.
"That is one point three billion dollars," Rep. Doug Barnard Jr. (D-Ga.), chairman of a House subcommittee that has been investigating fraud in the industry, said in a slow drawl, emphasizing the "b" in billion. "I'm going to be looking at that one very closely."
Overlying these statistics has been the inability of regulators to develop workable solutions to one of the nation's most serious financial problems.
The most recent innovation for cleaning up the industry, the Federal Asset Disposition Assn., deteriorated into an embarrassing political mess. Congressmen demanded the resignation of its $250,000-a-year chief executive and the Justice Department was asked to investigate its tactics.
The quasi-governmental agency, technically a savings and loan itself, was created by the bank board with great fanfare in late 1985. FADA was to take over the worst assets from the nation's closed or insolvent thrifts, manage them and find a buyer at a fair price. In the process, insolvent thrifts would be cleansed of problem assets and the money from the sales would help the bankrupt FSLIC, which insures about $900 billion in deposits of up to $100,000 at S&Ls; nationwide.
But a House subcommittee report to be issued in the coming weeks is expected to be a scathing criticism of FADA's inefficiency and the internal turf battles engendered by its creation.
According to Wall, FADA is working and, more broadly, policies and standards are being developed to allow the regulators to get a grip on the industry's problems in 1988 and eventually solve them.
His most ambitious plan involves disposing of 100 troubled thrifts between last August and the end of 1988 through mergers, acquisitions and liquidations. When Wall announced last November that he wanted 52 mergers or acquisitions in 1988, one a week, he was greeted with skepticism based on whether there were enough willing buyers, cash and expertise to get the job done.
The increased projection, disclosed in a Times interview, defies history and seems likely to kindle a similar skepticism. But Wall maintains that 100 is an achievable goal, when liquidations are counted, and that willing acquirers exist, even in Texas. Between August and Dec. 31, FSLIC disposed of 19 of the ailing thrifts.
Six of the deals were closed in the last two days of the year. On Wednesday, healthy Pelican Homestead & Savings Assn. in suburban New Orleans bought four ailing Louisiana thrifts in a regulatory-assisted deal that will cost FSLIC $294 million. And on Thursday, FSLIC announced that two more troubled Louisiana S&Ls; will be merged into Alabama Federal Savings & Loan of Birmingham, Ala., at a total cost to FSLIC of $184.9 million.
Jockeying for Position
The broad boundaries of the savings and loan crisis were known last summer when congressional leaders and the Reagan Administration proposed authorizing the FSLIC to raise $15 billion so it could begin closing the worst losers.
The money was a recapitalization measure for an agency that was bankrupt. But it was no taxpayer bailout.
The funds would come from long-term bonds issued by a new government-sponsored agency and sold to the public at interest rates slightly above U.S. Treasury bills. Interest on the bonds would be paid through existing assessments on federally insured savings and loans.
Many felt that $15 billion spread over three years would barely keep pace with the rising cost of closing bankrupt thrifts, but the proposal was an acknowledgment of the gravity of the problem.
Yet it led to the curious spectacle of lobbyists and executives from the S&L; industry swarming through the halls of Congress in an effort to slash the amount of the bailout. Instead of clamoring for more money, they wanted to limit the aid to $5 billion.
It was a strategy that struck some congressmen as short-sighted, if not downright bizarre.
"Their lobbying effort was as effective as any I've seen in five years in Congress," said Rep. Thomas R. Carper (D-Del.), whose backing of the full $15 billion brought him repeated visits from thrift executives in Washington and back home. "In my own view, the better tactic for the long haul would have been to have sought the big fix involving the full $15 billion. By doing so, they could have gone a long way toward setting to rest concerns about the health of the industry."
The thrifts had a different perspective.
Unhealthy institutions had a straightforward reason for limiting aid: The less money the FSLIC got, the fewer sick thrifts it could ax.
Their position was advocated by House Speaker Jim Wright (D-Tex.), whose constituents back home feared that a well-financed FSLIC would close too many Texas S&Ls; and disrupt the state's economy.
On March 19, with the House Banking Committee starting to consider the bailout, Wright took the unusual step of attending a closed caucus of committee Democrats where he delivered a plea for $5 billion in aid. After press criticism of his role, Wright reversed himself and co-sponsored a doomed effort to approve the full $15 billion.
For their part, healthy institutions would foot the bill for the bailout through extension of a controversial levy, so they wanted to ante up as little as possible.
Federal insurance for commercial banks and savings and loans is financed by levies on deposits held by each institution. Under the FDIC, banks pay a levy of one-twelfth of 1%. S&Ls; pay that figure plus a supplement of one-eighth of 1% that has been assessed since 1985 to bankroll the drained FSLIC.
The extra levy costs the S&L; industry roughly $1 billion a year, which means that thrifts are at a competitive disadvantage because they pay more for their insurance than commercial banks do.
The supplemental levy is scheduled to be phased out in about four years, unless the Federal Home Loan Bank Board decides that financial needs justify its extension. The industry was certain that a large bailout for the FSLIC would guarantee extension of the assessment.
Through their powerful trade association, the U.S. League of Savings Institutions, the weak and the strong battled to limit the recapitalization to $5 billion over two years. They said that was as much as the regulators could spend anyway. And they argued that that amount would be sufficient until the economy and the real estate market turn around and the ailing institutions heal themselves.
It was, one congressman said, "a holding action" designed to forestall widespread closings and forced mergers and limit the financial burden on the industry.
Alongside these motivations, some thrift insiders and congressional staff members saw a more subtle force at work. In their view, some S&L; leaders wanted to limit the recapitalization of FSLIC to an inadequate level to hasten the day when the burden of rescuing the industry would be shifted to the taxpayers.
"They were setting the stage for Recap II in two or three years, in which the savings and loan business says it has been bled dry and it's up to the taxpayer to rescue us," said Robert B. O'Brien Jr., chairman of Carteret Savings Bank in Morristown, N.J., a one-time FSLIC head and a prominent industry figure. "The early seeds of that campaign have been sown."
The first step was derailing the full bailout. By late July, the House-Senate conference committee agreed on an $8.5-billion recapitalization for the FSLIC. Only after President Reagan threatened to veto the bill because the amount was insufficient did Congress raise the figure to $10.8 billion. Reagan signed it into law Aug. 10.
That level meant that the industry will pay about $1 billion a year to cover the interest on the bonds, according to figures from the U.S. League.
The taxpayer was not tapped this time around. Congress was eager to avoid that political pitfall, at least until this year's elections are over. But, since the approval of the recap, talk of a taxpayer bailout has escalated.
At the same time, speculation also has emerged that the FSLIC will be combined with the FDIC, which has a surplus of $18 billion. But the commercial banks are expected to oppose that drain on their fund and the S&L; industry would fight to protect its separateness. So the most talked-about alternative is a taxpayer rescue of the FSLIC.
By the time the U.S. League held its annual convention in early November in New Orleans, the phrase "taxpayer assistance" was on many lips. Two key leaders held a press conference. Later, there was a dispute over whether they had actually suggested a taxpayer rescue, but the trial balloon had gone up.
Since then, the whispering campaign has grown so strong that Lamar Smith, the Republican staff director of the Senate Banking Committee, warned in December that some senators resented hearing industry leaders talk of a taxpayer rescue so soon after claiming that $5 billion was enough.
Speaking in New York to an industry gathering, Smith cautioned that there would be strong resistance to a taxpayer rescue, a position echoed in Washington.
But Bert Ely, a financial consultant who has testified before Congress and in court as an expert on troubled thrifts, told the same gathering that taxpayers will eventually have to "kick in billions" to save the industry. He contended that taxpayers should help finance the bailout because public policy failures created the crisis.
"The healthy thrifts should pay part of the tab," Ely said in an interview. "But there are limits to how much of the burden you can place on these institutions without killing them, too. The losses have gotten too big for the industry alone to deal with. Continuing to delay dealing with these problems makes the losses that much greater."
Growth Gone Amok
Much of the industry's problem can be traced to what the Brookings Institution, a Washington research organization, described in 1982 as "a web of government regulation that first protected them but later prevented their adjustment to market conditions."
When the financial industry was rebuilt during the Depression, the savings and loan business was designated to fill a critical need--providing mortgages for home buyers. Regulatory structures, including deposit insurance through the FSLIC, maintained the safety of the system and ensured a comfortable profit.
Government-imposed ceilings on interest rates paid to depositors allowed institutions to profit by making mortgage loans at slightly higher long-term fixed rates. The result was a prosperity that was rarely interrupted from 1935 to 1978.
But then interest rates began to rise. The S&Ls; were crushed by soaring short-term interest rates because their loan portfolios were still dominated by fixed-rate home loans at interest rates that were suddenly very low.
In 1980, the industry lost money for the first time since the Depression because the interest rates they were paying on short-term deposits exceeded the interest they received from long-term mortgages.
Regulators reacted by lifting the ceiling on interest rates. Congress and some state legislatures responded in 1982 by allowing thrifts to diversify, which ultimately amounted to pouring gasoline on a burning building.
To encourage thrifts to broaden their income base, legislators permitted them to invest a portion of their assets in commercial and non-residential loans for the first time. Limits on investing in securities were also liberalized.
Hungry for cash and freed from the interest rate ceiling, many thrifts used deposit brokers to scour the country for funds to put into the insured certificates of deposit. Savings and loans paid higher interest to attract the deposits, usually in denominations of $100,000 (the insurance limit) or more that were dubbed "jumbo CDs."
Once they got the new deposits, the thrifts had to invest them in ways that would yield enough to pay the higher interest rates. That meant securities and real estate deals that were often far riskier than single-family mortgages.
The growth was phenomenal.
Bell Savings & Loan in San Mateo, Calif., went from $484 million in assets in 1982 to $2.1 billion in 1984. Along the way, a $4,500 leather toilet seat was installed on its corporate jet.
Vernon Savings & Loan in Dallas accumulated assets of more than $1 billion, including a beach house, hunting club and five airplanes for executives and a portfolio of speculative real estate loans.
Empire Savings & Loan in suburban Dallas soared from $36 million in assets to $320 million, fueled by $302 million in construction loans, many later determined by the regulators to have been fraudulent, and $277 million in jumbo CDs.
Unfortunately, there were not enough solid real estate deals to go around and it became a case of too much money chasing too few good investments. Further, institutions often lacked the expertise to evaluate complex real estate projects, which left them prey to developers with sham projects who moved from thrift to thrift because the regulators could not react fast enough to stop them.
Some of these developers and other go-for-broke entrepreneurs bought their own thrifts, which they came to view as their private piggy banks.
So the growth raced forward, perhaps nowhere more rapidly and disastrously than at Beverly Hills Savings & Loan.
Between 1982 and 1984, Beverly Hills Savings was transformed from a small thrift into a $3-billion giant, with vast real estate investments in apartments and hotels. It entered into $400 million worth of real estate transactions with a developer who had personal ties to one of its executives.
Eventually, many deals went sour. Congressmen, sifting through the financial debris later, contended that Beverly Hills Savings went on a "joy ride" and that the federal regulators appeared "to have ignored very clear warning signs of impending disaster."
The pattern was repeated across the country.
Rep. Dennis E. Eckart (D-Ohio), who participated in oversight hearings on S&L; regulation, contended in an interview that the regulators were derelict in overseeing thrifts in the early 1980s and that the failure allowed the problems to mushroom.
"The pretense of protection is worse than no protection at all," he said.
His assessment was echoed by a former senior FSLIC staff member, who said: "The whole supervisory process was overwhelmed, and it let some bad guys into the industry."
As a footnote to that chapter, Bell, Vernon, Empire and Beverly Hills Savings were among the epidemic of failures that gave the entire industry its black eye.
A Regulatory Void
Part of the reason the FSLIC was overwhelmed was because the agency had suffered staffing problems for years. Its best people often used the agency as a training ground for better-paying careers in the private sector. An internal report compiled last year put the average tenure at 18 months.
On top of that was the feuding between the FSLIC and the second regulatory arm of the bank board, the 12 district banks around the country. The banks and the FSLIC shared regulatory duties, which resulted in conflicts that were heightened as pressure mounted to deal with the rising number of failing institutions.
The infighting took its toll. Efforts to solve problems were often bogged down by competing bureaucracies, as illustrated in a story told by a former high-ranking FSLIC official.
When the FSLIC wanted to sell the insolvent South Bay Savings & Loan in Gardena to a home-building company in 1986, the deal was put together fairly quickly. But when the FSLIC sought approval from the district bank in San Francisco, the bank responded with a list of conditions that stalled the deal for several months.
Another reason for the inability to dispose of large numbers of failed institutions was the reluctance of the bank board itself to open the acquisition process to people unaffiliated with the savings and loan industry, according to a report for the board last summer by O'Brien, the Carteret chairman.
Indeed, the board's skittishness in dealing with outsiders was demonstrated last spring when a group of investors led by former U.S. Treasury Secretary William E. Simon negotiated to acquire the insolvent Southern California Savings & Loan. The board was so nervous that its chairman at the time, Edwin J. Gray, was personally involved in the talks.
"Ed didn't want to lose his pants to Bill Simon," said a former FSLIC mergers official.
Critics said the $217.5 million in cash assistance given to the Simon group was still too much, particularly because the FSLIC was so short on cash at the time.
Gray, a former San Diego S&L; public relations official, left another legacy at the agency: low morale resulting from his weakness as an administrator and a series of embarrassing ethical lapses.
For instance, in December, 1986, when he was highlighting financial troubles at the FSLIC in an attempt to win a congressional bailout, Gray apologized in a public letter to a senator for "flawed judgments" in dealing with his own expense account. He had used $11,000 in bank board money to pay for his wife to accompany him on business trips.
His successor, Wall, came with good credentials for repairing the damage on the Hill. He had been a staff member on the Senate Banking Committee for more than 12 years. But Wall is saddled with a problem of his own: He began as a lame duck because the new Administration has the authority to appoint a new bank board chairman next January.
"It has clearly hampered Danny's ability to attract the kind of top talent he needs to rebuild the agency," said one S&L; executive who turned down an appointment to the FSLIC.
The Band-Aid Solution
When the interest rate crunch of the late 1970s began to put savings and loans out of business, the regulators responded in the early 1980s with a plan called the "Phoenix program." It lumped many sick thrifts into a single large one, which cost less than completely liquidating them but did little to make the problem go away.
In April, 1985, the regulators tried a variation of that holding action. The new plan was called the management consignment program, or MCP for short, and its first official member was Beverly Hills Savings.
"The management consignment program was thought up on the run in recognition of the fact that the FSLIC couldn't handle the problem," said Robert E. Brick, deputy director of the FSLIC merger division until last October when he joined the consulting firm of MCS Associates. "It was a recognition that the problem was too big and came off too suddenly."
The MCP was intended as a short-term plan to replace the management of the most severely troubled thrifts and control the losses until the institutions could be merged, sold or liquidated. Executives were replaced with temporary managers, usually from healthy thrifts, who were supposed to prepare the institution for sale or merger.
From the FSLIC's point of view, the program delayed the outlay of its dwindling cash in paying off depositors or assisting new owners and paved the way for disposing of the worst of its failed thrifts.
Unfortunately, the industry's deteriorating condition and the FSLIC's limited funds meant that few thrifts ever left the MCP. The temporary solution evolved into a seemingly permanent one, and MCP institutions are routinely referred to as "brain dead."
A study by the General Accounting Office, an investigative arm of Congress, found that only nine of the 54 institutions in the program had been liquidated or acquired by the end of 1986. The GAO study of the remaining 45 found that their operating losses totaled $1.3 billion since being taken over by the FSLIC and that they were in worse shape than before they were taken over.
The continuing losses, the GAO report said last September, "makes it clear that, had these institutions been closed at or near the time of their entry into the MCP program, FSLIC's resolution costs would have been lower than they would be if FSLIC were to close them now."
Sixty-one thrifts are now in the MCP, and Wall said they are among the 100 institutions he expects to dispose of before the end of 1988.
The FADA Debacle
Even before the MCP failure was recognized, Gray and other regulators were searching for alternatives.
At a convention in Honolulu in the fall of 1985, Gray gave his blessing to the industry-spawned concept of a quasi-governmental corporation to liquidate the growing volume of problem real estate loans in the failed thrifts. The Federal Asset Disposition Assn., or FADA, was created that November.
The primary problem with most insolvent thrifts is that they hold bad real estate loans and property of questionable value acquired through foreclosure. FADA was created as an agent of the FSLIC to assume the worst loans and property of failed thrifts and manage and sell them for the best price.
The proceeds would replenish the FSLIC coffers and the resulting "clean" thrifts would be attractive candidates for merger or acquisition.
The concept stirred new turf battles from the outset. The FSLIC had its own liquidation staff and the creation of FADA was viewed by many as a slap in the face to FSLIC.
On top of that, FADA was created outside the Civil Service system so it could pay enough to attract top professionals from the private sector--and far more than the Civil Service workers at FSLIC.
But FADA was set up amid great hopes and its president and chief executive, Roslyn B. Payne, was hired in January, 1986, from more than 100 applicants nationwide.
Payne was a "work out" specialist who negotiated settlement of troubled real estate loans with a San Francisco firm. Her salary was $250,000 a year--$50,000 more than the President of the United States gets. The salaries of her 17 top officers totaled $2.1 million a year.
It was Payne's salary that became a lightning rod for congressional criticism, which intensified with the disclosure that Payne received a $75,000 bonus in 1986, despite FADA's paper loss of $3.6 million.
Even Payne's defenders conceded later that the large salary was a mistake. They also acknowledged that Payne did not help herself much because her lack of public relations and political acumen grated on congressmen and bureaucrats.
"The same traits that made her a tough negotiator made her a bad chief executive," one supporter said.
FADA critics said the organization lacked incentive to sell its $5.2-billion portfolio of troubled properties. FADA collects a fee for managing property, but nothing for selling it. Congressional critics said FADA closed sales on only 23 of the 1,036 properties that it managed. The total value of the sales was $13.5 million.
Real estate developers complained that FADA's bureaucracy made it impossible for them to purchase property, and last July 16 a subcommittee of the House Banking Committee opened an investigation into the agency.
In addition, Rep. James J. Florio (D-N.J.) demanded a Justice Department inquiry after a developer complained that FADA had hired a private detective to investigate him after he criticized its failure to sell him properties.
Another developer claimed that Payne offered him a $35,000 consulting contract to silence his criticism. When a CBS reporter asked Payne about the allegation in a televised interview last Oct. 6, she stormed off camera after a curt denial.
Her performance on CBS was only part of the criticism aired on Oct. 15 when Danny Wall was called before a House of Representatives subcommittee to respond to the criticism of FADA.
Rep. Fernand J. St Germain (D-R.I.), chairman of the House Banking Committee and head of the subcommittee investigating FADA, gaveled the hearing open and led off with a summary of his staff's preliminary findings.
"What has emerged to date is the picture of a runaway agency more interested in constructing a lavish bureaucracy than in the nitty-gritty of timely recovery of funds from a massive inventory," said St Germain. "FADA has become a fat cat in record time."
After its 1986 losses, St Germain said FADA was $7.7 million in the red so far in 1987. He said FADA competed with the FSLIC, rather than cooperated, and tried to escape accountability to the bank board.
Other congressmen voiced similar complaints before Wall was allowed to respond. He said the FADA board had met the night before and authorized steps to eliminate the problems.
Wall praised Payne but he said she would step aside as chief executive officer. When questioned by St Germain, Wall said it had not been decided whether she would retain the title of president or her full salary. (Wall said in the interview that Payne is still president and her salary is under review.)
In an interview Wednesday, Payne said most criticism of FADA was "bunk" based on misconceptions about the association's mission. But she acknowledged that confusion existed over FADA's relationship with the FSLIC and she said those problems are being worked out.
Payne said 1987 statistics for FADA will show progress in disposing of property and loans, though most of the work has been renegotiating loans, which does not show up as plainly on the bottom line. While some deals are still being closed, Payne said FADA will have sold property and renegotiated loans worth about $500 million.
"When the smoke clears, from an accounting point of view, we will still be in the red," she said. "But from a cost-containment and management point of view, I'm very pleased about our performance."
However, a report scheduled for release in a few weeks by St Germain's staff could revive the controversy. While the final language has not been approved by the committee, the inquiry's findings are tough on FADA.
"FADA has probably spent more money trying to save the government money than any agency we've ever seen," said Gary Bowser, a former GAO auditor on St Germain's staff.
Wall inherited an organization beset by low morale and insufficient finances when he took over from Gray as bank board chairman.
The new chairman has received high marks as a forceful personality whose plans could contribute to a turnaround within the regulatory agency and the industry itself. But he is strapped by staff problems, his status as a lame duck and the troubles that hobbled FADA.
Nonetheless, the solution he envisions includes FADA, which Wall says has a key role to play in solving the industry's worst problem, getting rid of problem loans and bad real estate deals.
"By no means do we see FADA as the only means of dealing with our basket of problem assets," said Wall. "But we need to manage and dispose of an enormous number of assets and it is not very realistic to eliminate one of the tools for doing so."
The question remains: Are the tools sufficient for cleaning up the $50-billion S&L; waste heap or is a taxpayer rescue inevitable?
Few believe that Congress would approve a taxpayer bailout as anything but a last resort.
"A federal bailout is not the answer," Rep. Eckart agreed. "The taxpayer would not stand for it."
Yet most people on both sides of the taxpayer issue believe that the matter will be raised when legislators and a new Administration confront what many believe is the inadequacy of FSLIC insurance and the industry to finance the reconstruction of the nation's savings and loan business.
Until a solution is achieved, it seems certain that this equivalent of a toxic waste dump will continue to poison the entire savings and loan industry.