Seized Property Deal Reported to Prove Costly

The first deal in the Bush Administration’s plan to sell off properties seized from failed savings and loan institutions is costing taxpayers far more and buyers far less than originally disclosed, a published report says.

Quoting government officials and documents, the New York Times said in today’s editions that the beneficiary is Patriot American, a newly formed partnership of Americans Paul Nussbaum and William Mack and Canadians John Daniels and George Mann.

The partnership is to buy properties originally scheduled to be sold to others at or near appraised value but now going to the four partners for prices as low as 60% of appraised value.

The package would cost $500 million and would be bought with $400 million in government financing carrying no interest for the first seven years, the report said.

Patriot is represented by Richard Hohlt, a lobbyist with close ties to the Bush Administration and to government officials supervising the sale, the newspaper said.

According to officials at the Resolution Trust Corp. overseeing the sales, it said, two RTC employees, Kenneth Halterman and an unnamed other official, complained that the government stood to lose tens of millions of dollars in the deal.

Their memorandum of complaint was purged and the two officials punished, the paper said it was told.

Rep. Jim Leach (R-Iowa), a member of the House Banking Committee, called suppression of the memo “an invitation to corruption.” He also said the government should have used competitive bidding, the story said.