Bush S&L; Plan May Rule Out Fire Sales

From Associated Press

The Bush Administration is considering an addition to its savings and loan plan that would be aimed at discouraging the government from dumping the repossessed real estate it inherits from failed institutions, an industry official said Monday.

Administration officials, in response to members of Congress worried about the potential of real estate fire sales, are examining proposals to combine federal and state money to pay for a real estate maintenance program, according to Kenneth A. Guenther, executive vice president of the Independent Bankers Assn. of America.

As part of the program, some of the real estate could be used for day-care centers, food programs or in some other way that meets President Bush’s “kind, gentler” social objectives, he said.

In other S&L; developments:


- Rep. Henry B. Gonzalez, (D-Tex.), chairman of the House Banking Committee, introduced the Administration’s S&L; proposal in the House on Monday. It was referred to Gonzalez’s committee, defusing a jurisdictional dispute between the banking panel and the House Ways and Means Committee that could have delayed congressional action.

Rep. Dan Rostenkowski, (D-Ill.), chairman of Ways and Means, had sought joint jurisdiction.

- Six Washington-based “think tanks"--ranging from the conservative Heritage Foundation to the liberal Brookings Institution--issued a statement saying the Bush proposal doesn’t provide enough money or reform.

Gonzalez and other legislators from Texas are worried that if regulators try to sell off repossessed real estate too fast, it could collapse the already weak real estate market in the state.


Guenther described the possible addition of a property management program to the Administration plan as a contingency rather than a Bush initiative.

An Administration official, who spoke on condition of anonymity, said the Administration wants to preserve regulators’ discretion to judge the best time to sell.

“I don’t think anyone anticipates that real estate would be dumped,” the official said. “But we would prefer the flexibility to sell as market conditions dictate and permit.”

Two Texas Republicans--Sen. Phil Gramm and Rep. Steve Bartlett, both members of the banking committees--agreed that it would be unwise to dictate when or how regulators can sell property.

The six groups critiquing the Bush plan were the National Taxpayers Union Foundation, the Cato Institute, American Enterprise Institute, the Competitive Enterprise Institute, the Heritage Foundation and the Brookings Institution.

They said Bush’s plan to raise $50 billion for S&Ls; over three years does not provide money fast enough and that the government should spend $50 billion by the end of the fiscal year on Sept. 30 and then see how much more it needs.