Bush May Play Politics With S&Ls;: Riegle : Thrifts: The senator says he suspects the Administration will raise its cost estimate of the bailout after the November election.

The chairman of the Senate Banking, Housing and Urban Affairs Committee warned Wednesday that the Bush Administration may delay seizing several large, troubled thrifts in California until after the November election to avoid further fallout from the S&L; crisis in a politically crucial state.

Sen. Donald W. Riegle Jr. (D-Mich.) said the Administration, which now insists that the S&L; crisis is in its final stages, may be planning a post-election “January surprise” in which it increases its estimates of the cost of the S&L; bailout and takes over dozens of institutions left open during the election year.

Riegle said he has no proof of such a strategy but that he wanted to force the issue into the open. An Administration spokesman denied that such a plan exists.

During a committee hearing on the status of the S&L; crisis, Riegle said that the Reagan Administration downplayed the potential costs of the S&L; bailout before the 1988 election. After it took office, the Bush Administration was forced to acknowledge that the expense to taxpayers would be much larger than anticipated, he said, and it pushed through radical legislation to pay for it.

“In 1989, we were given a very different picture than the one we were given in 1988,” Riegle said. “This time, we don’t want to pole vault the problem past the election.”

Timothy Ryan, director of the Office of Thrift Supervision, denied Riegle’s assertions. He told the committee that the Bush Administration has delayed the takeover of some thrifts only because the House has repeatedly rejected Administration requests for new funding for the thrift cleanup. All of the large, struggling thrifts in California will be taken over before the end of the year, he said, even if Congress does not approve new funding for the Resolution Trust Corp., the federal agency created to clean up the S&L; mess.

“I can say categorically that no decision in our agency is being made based on the political consequences,” Ryan said. “Zero, none.”

Riegle agreed that the refusal of the House to approve new funding for the RTC has complicated the cleanup effort.

But he also maintained that the White House, fearful of highlighting the S&L; crisis in an election year, has not pressed hard enough to persuade Congress to approve the funding.

During the hearing, Riegle confronted Ryan with detailed data for what he described as a large California thrift, which he refused to identify. Riegle said figures show the institution is insolvent.

Ryan said all such institutions are scheduled to be seized by the government. Riegle pressed on, however, demanding a commitment that the government’s seizure rate would not accelerate after November.

“I don’t want to see, after Nov. 3, a whole big burst of institutions that come out of the pipeline and go over to the RTC,” Riegle said.

Sources inside the RTC and the General Accounting Office, the investigative arm of Congress, also have said recently they believe that several large, financially ailing California thrifts have been wrongly left open by regulators.

RTC sources said that internal agency documents show at least three large California S&Ls; have been declared technically insolvent by federal regulators.

Homefed Bank in San Diego, hurt by bad real estate loans, is considered in the worst shape of the state’s thrifts and has been targeted for a federally assisted sale by regulators. California Federal Bank and Glendale Federal Bank are troubled--both fall short of regulatory capital requirements. Coast Federal is also struggling, but has shown improvement lately.

Congressional Budget Office Director Robert Reischauer testified Wednesday that he believes that some troubled thrifts have improperly been left open.

He added that, despite the Administration’s assertion that the S&L; crisis is in the “eighth inning,” the government may be forced to pay for bailouts of hundreds more S&Ls; over the next few years, potentially adding tens of billions of dollars to the cleanup costs.

But Ryan noted that the thrift industry reported strong earnings of $1.5 billion in the first quarter of 1992 because of favorable interest rates, and he insisted that the S&L; crisis is in its “final stages.”

Reischauer warned, however, that the Administration, eager to put the thrift crisis behind it, has failed to recognize the potential costs of future bailouts. He said that the Administration is planning to shut down the RTC by Oct. 1, 1993, when a new deposit-insurance fund will take over the job of protecting the savings of S&L; customers. But he contended that the Administration has not yet requested adequate money to support that fund.

Times staff writer James Bates in Los Angeles contributed to this story.