Funding Crunch to Force Seizures of S&Ls;, Ryan Says

The nation’s top thrift regulator said Wednesday that the government will seize four or five crippled savings and loan associations by the end of the week because Congress has refused to provide funds to sell the troubled institutions to private buyers.

Timothy Ryan, director of the Office of Thrift Supervision, said the takeovers will continue weekly through a roster of 45 S&Ls; with $38 billion in assets. He refused to identify any of the S&Ls; targeted for takeover.

Ryan will be carrying out a pledge he made several weeks ago in response to the refusal of the House to provide new funding for the Resolution Trust Corp., the agency handling the disposition of nearly 700 failed thrifts.

The money could have been used in a program devised by Ryan for the troubled thrifts to be sold intact. The funds sought from Congress would cover losses at the thrifts from real estate and other assets that have deteriorated in value.

Ryan claimed that selling the institutions relatively intact would save taxpayers money, compared to the piecemeal sales of branches and assets that often occur long after a thrift is seized by the government and dismantled.

“We’ve been waiting and waiting, and we can’t wait any longer,” Ryan said after the meeting of the RTC Oversight Board, expressing exasperation with the delay in congressional funding for the RTC.

The same sense of frustration came from Treasury Secretary Nicholas F. Brady, chairman of the Oversight Board, who told the meeting: “The overriding concern is the lack of funds to continue the cleanup process.” RTC Chief Executive Albert V. Casey estimated that the first three-month delay in funding will add $200 million to $250 million to the cost of the bailout. A second three-month delay would add an additional $600 million to $900 million, he said.