Rescuers to Spend $8 Billion on S&Ls; This Month

Federal regulators plan to spend about $8 billion by the end of September to restructure or close insolvent thrift institutions, Federal Deposition Insurance Corp. Chairman L. William Seidman said Thursday.

The figure is $3 billion higher than previous estimates, and an FDIC spokesman said the increase is related to FDIC’s work on the sale or merger of five “relatively large” savings and loan firms with assets averaging between $700 million and $800 million. He said the actions are on a “fast track” because the deals will not be structurally complex.

The $8 million is part of $20 billion that the Resolution Trust Corp. is required by the new savings and loan bailout legislation to spend by the end of the current fiscal year on resolving the cases of insolvent thrifts. The RTC is the entity created by the bailout bill to deal with insolvent thrifts under FDIC’s management.

The other $12 billion will be used to replace sick thrifts’ high-cost brokered deposits as they mature with lower-cost government funds, Seidman said in a talk at the annual meeting of the board of governors of the Mortgage Bankers Assn.