Wall Calls 259 Sick Thrifts a $17.4-Billion Problem

The head of the agency that regulates federally insured savings institutions said Wednesday that the cases of 259 “grossly insolvent” thrifts would be resolved by 1990 at a cost of $17.4 billion.

Danny Wall, chairman of the Federal Home Loan Bank Board, said in a speech to a U.S. League of Savings Institutions conference that the ailing savings and loan industry is “getting better.”

But, he added, “the healthy are getting healthier, and the sick are getting sicker.”

The caseload of the Federal Savings and Loan Insurance Corp., which insures savings deposits of up to $100,000, includes 259 “grossly insolvent institutions,” he said.

“We are clearly on a track that will have us resolving 259 institutions as a minimum by the end of next year,” Wall said.

He said he expected that it would cost $17.4 billion to shut down or bail out the sick institutions. About 50 cases have been dealt with this year, he said.

The General Accounting Office, Congress’ investigative arm, has estimated that more than 500 S&Ls; are insolvent, more than 200 of them hopelessly so.

GAO also has said the size of the entire thrift problem could be from $26 billion to $36 billion. Other estimates have ranged from $20 billion to $60 billion.

Last month, the bank board reported that the 3,118 federally insured savings institutions suffered losses of $3.8 billion in the first three months of this year, more than half of the record $7.6-billion loss in 1987.