U.S. May Be Forced to Seize More Thrifts, Official Says : S&L; crisis: Chief regulator prods Congress to act more quickly in approving funds for the cleanup.

The nation’s chief thrift regulator said Thursday that unless Congress quickly approves more funds for the savings and loan cleanup, the government will be forced to seize troubled thrifts previously slated for taxpayer-assisted sales.

Timothy Ryan, director of the Office of Thrift Supervision, said such action would cause the cost of the thrift bailout to “explode” because the government would be forced to pass up potential opportunities to find private buyers immediately for troubled thrifts. He said this could have a particularly depressing effect on California real estate because commercial properties held by troubled thrifts there could be dumped on an already weak market.

Ryan’s warning was part of an intensified lobbying campaign by the Bush Administration to persuade a recalcitrant and angry Congress to approve additional funds for the Resolution Trust Corp., which has handled the disposition of more than 600 failed thrifts. The agency’s permission to spend money for thrift sales and dispositions expired April 1, and Congress has steadfastly refused to grant more funds.

The threat of a new round of thrift seizures could have reverberations in Southern California. Ryan would not identify any individual institutions, but sources indicated that San Diego-based Homefed is on the OTS list of most severely troubled thrifts and could be affected by the funding debate. The regulators earlier this year announced that Homefed would be sold in a government-assisted deal.

Calfed and Glenfed are in slightly better shape but are still considered to have serious financial problems. Those institutions and Homefed have large portfolios of troubled commercial real estate.

Federal regulators have been trying to find buyers willing to take entire troubled S&Ls;, or large portions of their assets, as an alternative to a government takeover. The RTC needs additional funding to cover the gap between the original value of the assets and the sale price.

If Congress votes for the $42 billion sought by the Administration, federal regulators can find buyers quickly for thrift assets, reducing the ultimate cost of the bailout, Ryan said in an interview. Otherwise, the assets will be sold much later, probably piecemeal and at distress prices.

“We need the money and I’ve got to get the job done,” said Ryan, who met Wednesday with California’s congressional delegation and who is continuing to lobby personally with other members of Congress. “In the 1980s, regulators said we have a problem, and Congress didn’t provide the money and the cost exploded. We do not want a rerun of the 1980s.”

Ryan said he may recommend additional government takeovers of troubled S&Ls; as soon as the end of May, a step that would cause an immediate decline in the value of the real estate and mortgages owned by these thrifts.

Because there is no new money available now, the regulators would simply arrange a federal takeover of the institutions, with sales of assets coming much later. Meanwhile, the value of commercial mortgages and real estate owned directly by the institutions would deteriorate sharply. Commercial borrowers would stop making payments on their loans, figuring they could buy them back from the government at fire-sale prices.

Despite Ryan’s efforts, there is little sign of willingness in the House to approve RTC funding, which was overwhelmingly defeated in the first attempt at passage last month. The Senate approved a funding bill.

The RTC “is in a terrible political situation,” Rep. Maxine Waters (D-Los Angeles), a member of the House Banking Committee, said Thursday. “Members of Congress don’t like to be continuously accused of bailing out the S&Ls.;”

In an election year, when there seems be to be “no money for jobs and job development,” there is no enthusiasm for supporting the RTC, she said. House Democrats “won’t hang out there and vote for the RTC without the Republicans taking their share of grief on it,” she said.

Ryan predicted that the Bush Administration will be able to deliver a majority of House Republicans to support funding for the RTC.