Regulators Push for Speedier Sale of Failed S&Ls;, Assets
The agency created to oversee the savings and loan bailout said Wednesday that it plans to speed up efforts to sell the troubled S&Ls; and real estate assets it has acquired in hopes of paring inventories by year-end.
L. William Seidman, chairman of the Resolution Trust Corp., said the agency hopes to trim its stockpile of thrift institutions by 130 during the next five months, leaving it with 337 S&Ls; on the federal books. Eventually, he said, 900 institutions could pass through government hands.
Seidman said the RTC also plans an international auction Nov. 15 aimed at finding private buyers for $300 billion in real estate acquired in the bailout and that it will open a national sales center to help out.
On the block will be some of the RTC’s plum holdings, including a golf course in Corpus Christi, Tex., and a 300-room hotel in San Antonio, as well as office buildings in San Diego, Pomona, Redwood City and Walnut Creek, Calif.
“We’re going to have a great sale,” Seidman told a news conference designed to call attention to the stepped-up efforts. “The fall inventory-reduction sale has ambitious goals. We certainly intend to go on an all-out effort to make them.”
The announcement came as Deputy Treasury Secretary John Robson warned separately that any “major political storm” over S&L; sales the government made in late 1988 is likely to “scare buyers and sellers” of insolvent thrifts and disrupt the bailout process.
“You get a huge political sound and light show,” Robson said, “and the potential buyer says: ‘I’m a good guy, lived here in Omaha all my life, run a good business . . . boy, they haul these guys up and hang ‘em in the village square, and I don’t need that.’
“On the sellers’ side, you’ve got people in government . . . and they look at people getting hauled up and shot at and they say: ‘Golly, I better dot every ‘i’ and cross every ‘t,’ and . . . the process slows down.”
Robson said he sees no evidence that criticism over the government’s S&L; deals has had such an impact yet but warned that the scenario is “speculative, but not unreasonable.”
Robson also rejected any suggestion that the Bush Administration fears the U.S. banking system is on the verge of failure or that the Federal Deposit Insurance Corp. fund will not cover expected bank failures.
“The condition in the real estate market . . . is probably the single most identifiable element with respect to the banks,” Robson said. “But I don’t think that we or the Fed (Federal Reserve Board) . . . are going around in a state of anxiety or alarm.”
In separate testimony before the Senate Banking, Housing and Urban Affairs Committee, the General Accounting Office’s top S&L; expert, Assistant Comptroller General Richard L. Fogel, cautioned lawmakers to be wary of inflated estimates of how much fraud was involved in the S&L; debacle.
Under questioning from panel members, Fogel noted that, although fraud apparently was a factor in a high percentage of S&L; failures, it was a major cause or contributor only in a small proportion.
Seidman, too, was cautious in his assessments on that issue, pointing out that “where there is fraud, there’s usually mismanagement” as well. He said that fraud often was a factor, “but not the majority factor” behind the failure of many S&Ls.;
RTC officials said the new national sales center that the agency is establishing to handle disposition of its real estate and other assets will have offices in Washington and 14 other sites around the country.
Thomas P. Horton, the center’s director, said the group plans to have some $500 million worth of securities, real estate and other assets up for bidding by the end of the year. “We’re on a fast track here,” he told reporters.
The RTC has been under pressure to speed up liquidation of assets it acquired in taking over troubled S&Ls.; Unless it sells more of those assets soon, it must continue to pay interest on them without receiving any income.
At the same time, the agency faces a companion dilemma: If it moves too quickly, it could depress real estate values.
SEIDMAN BACKS OFF: Thrift bailout chief L. William Seidman says the rescue effort may cost less than $500 billion after all. D7
