$80 Billion Here, 80 There . . . What a Mess : Oh so many problems for new federal trust boss Casey
Taxpayers should begin thinking of themselves as shareholders of the Resolution Trust Corporation and doggedly track their investment in the agency that is supposed to bail out the nation’s troubled savings and loans. Because here we are, a mere two years after its creation, and the RTC is seeking $80 billion more from Congress. The agency has already spent that much with little to show. A shareholder would never tolerate this. It’s time for no-nonsense management.
That’s the mandate for Albert V. Casey, 71, the ex-American Airlines chairman named by the Bush Administration to be the RTC’s first chief executive officer. The businessman has standing in Washington, where he once was postmaster general.
The Administration created the CEO post in an effort to persuade Congress to provide additional money and head off attempts to restructure the RTC.
L. William Seidman now heads both the RTC and the Federal Deposit Insurance Corporation but will leave government next month.
The RTC embarked on its mission as the real estate market began to head south, credit began to tighten and then wham-- the recession hit. Market conditions were not exactly conducive to success. Things aren’t much better yet. Here are the key challenges facing Casey:
1. Establishing who’s in charge.
Casey takes his new job in mid-October. Confirmation hearings on the FDIC top post for William Taylor, a Federal Reserve official, are under way. Casey and Taylor must quickly separate the responsibilities in agencies that once were headed by one man, Seidman. Critics have complained that Casey’s duties as chief executive are ill-defined. This could lead to needless political squabbling that the RTC cannot afford. Casey sees himself as an organizer--but will he have the power?
2. Filling the information vacuum.
In July, 1990, the General Accounting Office complained that the RTC lacked leadership, clear lines of accountability and responsibility for managing information resources.
3. Fixing the computer mess.
The GAO last week said that a $24-million computer system purchased to monitor the billions of dollars worth of properties seized from failed S&Ls; has been virtually useless because of missing, confusing or erroneous data. The GAO said an accounting firm had found a 20% to 30% error rate in computer files. The RTC maintains that the problem reflects the sloppy record-keeping of the failed thrifts.
4. Finding out where the money is.
The agency has control over an estimated $20.4 billion in real estate assets and keeps adding to its inventory as more thrifts go belly up. So far, the RTC has sold properties worth $5.4 billion. Taxpayers ought to get a full accounting.
5. Running it like a private entity.
The RTC should be streamlined in order to be more efficient and businesslike. It has become a bureaucratic snarl. It would be preferable to restructure day-to-day operations within the agency without getting Congress involved.
Congressional dabbling, at this point, could cause more unnecessary, costly delays. RTC’s shareholders--the taxpayers--deserve better.