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BANKS AND S&LS; : S&L; Losses in ’90 Piled Up Despite Seizures

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From Associated Press

The savings and loan industry deteriorated steadily during 1990, despite the government’s seizure of more than 200 institutions, regulators said Thursday.

The 2,342 thrifts still outside government control at year-end lost $965 million in the final three months of 1990 and $2.41 billion for the entire year, the Office of Thrift Supervision said.

The 1990 loss was down from $6.23 billion in 1989, largely because of the removal of 213 failed institutions by the government bailout agency, Resolution Trust Corp.

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However, a 25% increase in losses from the third to fourth quarters occurred even though 39 insolvent S&Ls; were seized.

Also, private-sector S&Ls;’ bad loans as a percentage of all loans rose steadily through the year, despite the removal of the worst thrifts. The percentage was 2.34 at year-end compared to 2.03 at the end of the first quarter.

Thrift office Director Timothy Ryan said lower interest rates and the continuing government cleanup should help the S&L; industry this year, but he was unwilling to predict immediate improvement.

“We are uncertain at this time what to expect in the first quarter of 1991, especially in view of the economic slowdown and weak real estate market,” he said.

Private analysts attributed the industry’s continuing problems to the national recession; to the deterioration of real estate markets, particularly in the Northeast, and to the housing industry’s slowdown.

“Thrifts have seen a very steep drop in their bread-and-butter business, home lending,” said economist Paul Getman of Regional Financial Associates Inc.

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“And, we’ve seen a lot of big real estate writeoffs, even at the healthiest and best-managed S&Ls.; You can imagine how the poorly managed have fared,” he said.

Economist Martin Regalia of the National Council of Savings Institutions said the industry may start improving this year but only if the government resumes shutting down and selling bankrupt S&Ls.; The program was slowed by Congress’ five-month delay in providing more money.

Open but insolvent institutions hurt competing healthy thrifts by paying high interest rates for deposits.

“The quicker the RTC closes these institutions down . . . the better will be the environment for all institutions,” Regalia said. “We can’t let these guys continue to corrupt the market.”

Differences between separate S&L; bailout bills, passed Wednesday night by the House and last week by the Senate, must be reconciled before President Bush can approve additional financing. Even so, the agency does not expect to restore its program to full speed until June.

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