U.S. Proposes Giant Auction of Real Estate : S&Ls;: The Resolution Trust Corp. will hold seminars on buying assets seized from collapsed thrifts.

The federal government will hold the biggest one-time real estate auction in history this summer as it tries to sell $200 million worth of office buildings, shopping centers, condominiums and other real estate from collapsed savings and loans, the chief regulator for the S&L; rescue effort said Wednesday.

Responding to congressional criticism that the S&L; cleanup is going too slowly, L. William Seidman unveiled an aggressive program to dispose of real estate, at cut-rate prices if necessary.

“If a property doesn’t sell, it probably will be because we’re asking too much and we’ll have to reduce our price,” Seidman, chairman of the Resolution Trust Corp., said in a speech to the National Press Club.

The real estate auction, to be held at an as-yet undetermined date, will be handled through “an audio network hookup throughout the country and overseas,” Seidman said.

The RTC will hold 10 seminars advising the public on buying the real estate assets, the RTC chairman said. Seidman spoke like a pitchman on late-night television, saying: “If you are interested, call 1 (800) 431-0600. Visa or MasterCard charges accepted (for the seminars).”

The cost to attend a seminar is $220.

Seidman’s agency also plans to sell 1,000 single-family homes within the next six months. It will offer $130 million in financing to help low-income people buy the properties.

Seidman’s address was designed to disarm his critics in Congress and in the Bush Administration who have complained about the pace of activity in shutting down or selling crippled S&Ls.; The government has seized 402 thrifts with assets of $220 billion, but has disposed of only 52 institutions.

Seidman announced an accelerated schedule for selling 350 of the seized S&Ls;, promising to unload 140 by the end of June and a “substantial part of the rest” by year’s end.

The remaining 52 will be shut down in “Operation Clean Sweep,” because they are so weak that it would be cheaper for the government to pay off depositors than to attempt a sale.

Seidman said he hopes to avoid a further buildup in the government’s roster of S&Ls; by arranging sales of failing institutions before a federal takeover.

“Since we know that putting institutions under RTC conservatorship lowers their franchise value, we plan to sell as many as possible before this happens,” he said. “Just like a car on the road has a better resale value than a car in the junkyard, we believe we can get a better deal for problem thrifts by keeping them off the junk heap.”

Under his plan, a buyer would be found for a failing S&L;, the institution would be seized by the RTC and then be “immediately reopened in the hands of the waiting buyer,” Seidman said.

The effort to deal with S&Ls; themselves will take only three years, compared to the decade-long task of selling the real estate properties of the defunct institutions, Seidman said.

The expensive dismantling of failed S&Ls; should generate political anger, according to Seidman. “Every citizen ought to be mad about what has taken place,” he said.

“If the government spends $50 billion on a tank that won’t operate, at least we have a broken tank,” he said. “Here we’re just filling a hole.”

Selling the bad assets, which Seidman called “opportunity assets,” is the only way to stop persisting losses for the government. “While we hold them, they create costs but produce very little income,” he said.

The ultimate financial burden on the taxpayer for closing hundreds of insolvent S&Ls; and paying off depositors, whose accounts are protected up to $100,000, depends on the government’s success in selling real estate. The cost for shutting down or selling the defunct S&Ls; is estimated at $280 billion over 30 years.

The government has become custodian of a huge portfolio of real estate, ranging from Oklahoma chili parlors to Arizona raw land, with a theoretical value of $100 billion or more. But the income from selling this real estate to help defray S&L; clean-up costs is highly uncertain.

Selling real estate is “the hardest part of our job,” Seidman said.

“The management and sale of all the assets taken over from closed thrifts is where our game will ultimately be won or lost.”

In addition to this summer’s real estate auction, the RTC expects to award a contract next month for the management and eventual sale of $350 million worth of property in Louisiana.

Although the sale of real estate is a slow and uncertain process, the RTC is moving quickly to dispose of other holdings of the insolvent S&Ls.; The agency is currently arranging the sale of $8 billion in mortgage and commercial loans and is planning the sale of $400 million in home equity loans and $150 million in student loans.