House Changes Course, Approves Bailout Funds

The House, under pressure to keep the savings and loan bailout under way, reversed itself Wednesday and voted to provide another $30 billion to pay off depositors who had money in failed thrifts.

Approval of the politically unpopular measure on votes of 213 to 197 and 192 to 181 came one day after the badly divided House rejected four alternative plans for pumping the $30 billion into the thrift salvage operation.

The compromise measure was negotiated earlier in the day at the urging of House Speaker Thomas Foley (D-Wash.) and Treasury Secretary Nicholas F. Brady.

The Senate passed its version of the bill last week, and the two chambers were expected to quickly work out their differences and send it to President Bush for his signature.

Earlier in the day, Foley said that efforts were under way to find a compromise but that “this is a difficult bill, a very difficult bill.”

Without an infusion of cash, the federal agency created to take over failed thrifts, sell their assets and pay off depositors will soon run out of operating funds.

The rancorous House debates came amid widespread complaints about the way the government is dealing with the defunct thrifts and worries among lawmakers about a voter backlash over the amount of money being spent on the thrift clean-up operation.

The Administration requested the $30 billion for the Resolution Trust Corp., the agency established in 1989 to dispose of real estate and other assets held by closed savings and loans and to pay off depositors.

Even with an additional $30 billion, the Administration is expected to come back in the fall with a request for $50 billion more. Congress authorized $50 billion for the operation in 1989.

The bill passed by the House on Wednesday included only a few minor management reforms sought by many Democrats for the RTC. Rep. Henry Gonzalez (D-Tex.), chairman of the House Banking, Finance and Urban Affairs Committee, said it was “obvious that the votes are not available for a full set of reforms at this time.”

Gonzalez said it was wrong to believe “we have a choice, that we have options. We don’t. . . . We must fund this.”

Opponents said that the measure was inadequate and that the RTC would continue to waste money.

Rep. Bernard Sanders (I-Vt.) said the bill “will stick it to the middle class and the working people” by making them pay for the bailout of wealthy depositors.

The Administration favored a “clean bill,” and there were threats of a veto if the bill includes the Democratic-backed RTC reforms.

Foley said the whole issue is “unpleasant.”

“Members don’t want to vote for this bill,” he said. “They want somebody else to vote for it. At the same time, it has to be done. . . . The government has an obligation to depositors.”

Foley said members “wish the savings and loans had not failed. . . . They wish these huge sums could be devoted to more constructive purposes.”