The Nation - News from March 12, 1989

The U.S. Treasury lost more than $8 billion because of the frenzy of taxpayer-subsidized thrift bailouts ordered last year by federal regulators, the U.S. controller general said in testimony in San Antonio. “It’s clear from our analysis that many of the deals should never have seen the light of day,” Charles A. Bowsher said at a field hearing of the House Banking Committee into the nation’s savings and loan crisis. “The taxpayers would have been better served if the institutions had been liquidated instead of rescued.” A preliminary report by the General Accounting Office, an investigative agency of Congress, said new investors in failed thrifts often put up far less cash than they received in tax benefits. But the thrift insurance fund was bankrupt, Bowsher said, and regulators had no choice but to make deals that did not require huge pay-outs to depositors. The government accepted bad loans on the portfolio and made guarantees against future losses, he said.