S&L; Bailout May Hit $600 Billion, Seidman Says

The final cost to taxpayers of the savings and loan bailout may reach $600 billion, Federal Deposit Insurance Corp. Chairman L. William Seidman indicated Saturday in an interview.

Seidman, who also is chairman of the Resolution Trust Corp., said on the CNN television program “Evans and Novak” that the costs would swell because of interest paid on money borrowed to finance the bailout.

Asked what the total price tag would be for taxpayers, Seidman said: “We talk about upfront dollars--that is, if we had all the money to pay today--I think the best estimate is between $175 and $200 billion.”

But Seidman said that excludes interest paid on money that the government will have to borrow.

“Probably if we borrowed for 30 years at 10%, why that could roughly triple the figure,” he said.

The head of the two major banking regulatory agencies also discounted the chances for an even bigger problem with the commercial banking industry despite recent financial problems of varying degrees at such major banks as Chase Manhattan, the Bank of New England and others.

Seidman said that while bank problems appeared to be spreading down the East Coast because of weakness in commercial real estate markets, “there’s very little possibility of (a major bank crisis).”

“Of course, if we have a major depression, recession over a long period of time it will strike heavily against the banking system,” he said. “But at that point I don’t think that will even be the most serious problem we have.”