Bank Board Chief Sees No S&L; Solution Soon
The Federal Home Loan Bank Board will continue to use its limited funds to bail out insolvent savings and loans institutions, but a permanent solution to the financial troubles of the thrift industry won’t be attacked until after the November elections, board Chairman M. Danny Wall said Monday in a speech in Coronado.
Wall, who spoke to the California League of Savings Institutions, offered sympathy--but no immediate solutions--to S&L; industry executives who continue to pay hefty Federal Home Loan Insurance Corp. special premiums to finance the federal government’s string of S&L; bailouts.
“The industry is shouldering the burden,” Wall said, “and only the Congress and the next president can deal with the question of how much is too much.”
‘Inconsistent Assignments’
Besides demanding that S&Ls; finance the bailouts, Congress has ordered the S&L; industry to “improve the capital of your individual institutions,” Wall said. “Those are two very inconsistent assignments.”
Wall complained that, although federal regulators have asked for authority to deal with the nation’s hundreds of troubled S&Ls;, “Congress continues to sit there and twiddle its thumbs.”
Wall spent the Labor Day weekend piecing together the proposed sale of Stockton-based American Savings & Loan Assn., the nation’s second-largest S&L; holding company, to the Robert M. Bass Group of Ft. Worth for $550 million. He said the complex sale, including required approvals by the state of California and the Internal Revenue Service, should be completed within weeks.
As part of that deal, which ended five years of uncertainty about the giant S&L;’s future, federal regulators agreed to give the Bass group a financial assistance package valued at $2 billion.
102 Cases This Year
The government, which has handled 102 problem thrifts so far this year, will deal with as many as 50 more before the year ends, Wall said.
On Friday, regulators announced that PHM Corp., a major home builder and insurance firm, will invest $45 million to acquire five insolvent S&Ls; in Texas. They identified four of those problem thrifts but withheld the name of the fifth. Wall on Monday said that S&L;, which will be identified soon, “is almost as big as the other four combined.”
S&L; loan portfolios in Texas have been savaged by falling oil prices and collapsed real estate values.
Wall said the California S&L; industry has remained “vibrant,” despite the fact that “10% of your brothers are a great big anchor dragging you down.”
