Officials of Unsound S&Ls; Should Pay, Senator Says

From Associated Press

Officials trying to bail out the fund that insures deposits in federal savings and loan institutions should go after executives of those institutions who contributed to the problem and get rid of unsound institutions, the chairman of a Senate Banking subcommittee said Monday.

“We ought to be seeing to it that those people who are driving around in Jaguars and have big yachts and belong to fancy country clubs come up to the bar now and pay up,” Sen. Alan J. Dixon (D-Ill.) said on “CBS This Morning.”

“There are a lot of people that were executives of thrifts around the country that are personally liable, and we ought to be getting after them,” said Dixon, who heads the Banking subcommittee on consumer and regulatory affairs.

“We ought to invoke safety and soundness rules against states that are liberalizing investment laws for thrifts and endangering the security of those institutions,” he said.


“And we ought to be putting some money into the FSLIC (Federal Savings and Loan Insurance Corp.) fund and reducing the number of thrifts in the country, getting rid of the bad ones and supporting the good ones.”

Asked if there was any chance that Congress would approve a proposal floated by the Bush Administration to charge depositors at banks and S&Ls; a fee of 30 cents per $100 deposited to help pay for insurance, Dixon said: “None whatsoever.”

“I haven’t heard of anybody that likes the idea, and I think that idea is born dead,” he said.

White House Chief of Staff John H. Sununu said Sunday that the proposal remains a live option despite widespread congressional and industry opposition. He also said on ABC’s “This Week with David Brinkley” that “there are a variety of options being examined.”

Noting that financial institutions have long paid a fee for federal deposit insurance, Sununu said the plan under study was simply a matter of “taking the current fee and adjusting it to affect the reality.”

If financial institutions were to pass along such an increased fee directly to depositors, American savers still would be getting a bargain for having their savings insured by their government, he said.