Regulators Rushing to Finish Bailouts Before Tax Breaks Are Halved

Federal regulators are racing the clock to complete a string of bailout packages for insolvent savings and loan institutions before the end of the year when tax breaks for investors will be cut in half.

Officials expect that before Sunday as many as 200 failed savings and loans will have been dealt with this year, setting a post-Depression record. By contrast, 48 S&Ls; were merged or closed last year.

So far the Federal Home Loan Bank Board has handled the cases of 184 failed S&Ls;, including two bailouts announced Wednesday that are among the largest.

The bank board put together a $5.1-billion package to assist in the takeover of five of the most troubled S&Ls; in Texas by an investment group led by Ronald O. Perelman, the head of Revlon, the cosmetics company.

Also on Wednesday, the bank board pledged $1.7 billion in government assistance in the purchase of American Savings & Loan Assn. of Stockton, Calif., the nation’s largest insolvent S&L;, by a group headed by Texas billionaire Robert M. Bass.

The size of the government assistance packages being required to attract new investors points up the depth of the problem facing the S&L; industry and the incoming Bush Administration, analysts said.

The trouble is that virtually all of the options President-elect George Bush can select from to deal with the crisis involve spending more federal money, which will in turn worsen his other big economic problem: finding a way to narrow the federal budget deficit without resorting to new taxes.

Estimates of the total cost to the government of resolving the S&L; mess range as high as $112 billion, and losses are mounting by $1 billion a month.

The bank board worked late into the night Wednesday as the agency raced the clock to finish as many deals as possible before Jan. 1 when certain tax write-offs will expire.