Thrift Agency, FDIC Accused of Extravagance

The agencies in charge of the savings and loan industry bailout and bank deposit insurance are spending lavishly on furniture, art and even coffee mugs--although they are in danger of running out of money, a House panel said Sunday.

A report by the subcommittee on financial institutions supervision accused the Federal Deposit Insurance Corp. and the Resolution Trust Corp. of “extravagant and unnecessary” spending.

It found that the RTC ordered 36 RTC coffee mugs and 12 golf shirts for $3,098 while the FDIC bought 2,400 coffee mugs for $6,210.

The subcommittee staff also found an invoice for 3,000 Asian cookbooks for $7,364.

Subcommittee Chairman Frank Annunzio (D-Ill.) said the report showed “a shocking waste and lavish spending by the FDIC. While the bank insurance fund is in dire financial straits, the FDIC and the RTC have failed to curb extravagant and unnecessary expenditures.”

In response, the FDIC called the charges “grossly misleading.” It said the report was based on a selective and incomplete review of the agencies’ budgets.

“The report will mislead members of Congress, the media and the American public,” the FDIC said in a statement.

The FDIC, which insures bank deposits up to $100,000, is expected to run out of money next year unless Congress approves a $70-billion line of credit with the Treasury.

The RTC, in charge of closing and selling the assets of failed thrifts, expects to run out of money before the end of the year. It has asked Congress for an additional $80 billion to cover losses from the bailout program--on top of $80 billion already approved.

Estimates of the total cost of the thrift bailout have gone as high as $500 billion.

The House report also said the FDIC spent more than $177,000 on art for a new office complex in Arlington, Va. The purchases included framed works costing as much as $2,755, it said.

The FDIC also spent lavishly on furniture, the report said. Its San Francisco office bought a desk for $1,362, a credenza for $1,126, bookcases for $410 apiece and four chairs for $510 each, it said.

And the FDIC paid a Washington company $31,274 to have various brass statues rubbed down with oil on four occasions, the report said.