RTC Selling Assets Faster Than Expected : S&Ls;: It raised $81.2 billion from seized securities, mortgages and real estate in the first nine months of this year. The projection was $60 billion.
The agency handling the savings and loan cleanup is running far ahead of schedule in selling assets from its huge portfolio of securities, mortgages and real estate, officials said Tuesday.
The Resolution Trust Corp. raised $81.2 billion from the sale of assets during the first nine months of the year, far above the initial projection of $60 billion, according to preliminary figures announced by Lamar C. Kelly, the agency’s deputy executive director.
The report was highly encouraging news for the often-controversial agency, which has been sharply criticized by many members of Congress for its sometimes cumbersome management of the assets and properties inherited from the collapse of more than 600 defunct S&Ls.;
“We have an excellent staff out there selling assets, and our program is beyond where we thought it would be at this time,” Kelly told reporters after a meeting of the national advisory panel for the RTC Oversight Board, which sets policies for the agency.
The agency has been ahead of its expectations for 1991 in virtually all categories of assets, Kelly said.
The easy-to-sell assets include government securities and mortgages on which payments are current. But the RTC also has been more successful than it had expected this year in disposing of some of its massive holdings of delinquent loans, and real estate, including office buildings, shopping centers, condominiums and single-family homes.
The RTC has an even more ambitious goal for next year, the sale of $100 billion worth of assets.
However, several hundred more S&Ls; are likely to fail, and the agency’s assets could increase significantly beyond its current holdings of $160 billion.
Peter Monroe, president of the oversight board, said the RTC deserves “definite praise” for its successful sales effort. “It takes a reasonable degree of courage to set the goals and monitor them,” Monroe said. “I’m very proud they have exceeded them by that much.”
However, he warned that the nationwide real estate recession could overwhelm the agency’s efforts to clear up the huge pile of assets.
“As the easier-to-sell assets move through the system, the sludge will build up,” he said, noting that federal agencies have a massive accumulation of foreclosed real estate. “As I travel the country, I do not yet see a recovery” in real estate, Monroe said.
“So, we’ve got a major problem,” he said.
Delinquent loans “are the fastest growing and perhaps the most worrisome part of RTC operations,” Monroe said. The national vacancy rate in office buildings is 20%, and some areas have even higher rates, he noted. This means that many real estate loans will go bad, forcing foreclosure by the S&Ls; already facing financial pressure. When dozens or even hundreds of the S&Ls; then collapse and are seized by the RTC, the RTC--and the taxpayers--will become the owners of even more real estate.
The S&L; cleanup already has cost $80 billion, and the Bush Administration is asking for $80 billion more to cover the shutdown of additional S&Ls; and make payments to depositors, whose accounts are insured up to $100,000.
The Administration wants Congress to approve the money without any changes in the RTC structure. However, Democrats are pushing for a changes in the structure of the agency.
