Lawmaker Urges Clinton to Reform RTC, Fire Chief

An influential Democratic lawmaker urged the Clinton Administration on Monday to dismiss the head of the agency responsible for cleaning up the savings and loan industry and to reform its operations before seeking more funds for the unfinished thrift industry bailout.

Rep. Bruce Vento (D-Minn.), a senior member of the House Banking Committee, accused the Resolution Trust Corp. and its president, Albert V. Casey, of being inept and inefficient, saying the added billions of dollars needed to dispose of failed thrifts should be withheld until the agency is overhauled.

Vento, who formerly headed a committee task force on the RTC, says the Administration must demonstrate “a substantial commitment” to reforming the way the RTC tracks and sells assets from failed thrifts. Otherwise, he warned, “there will not be a funding bill.”

In the past, critics of the RTC have said the agency is not always effective at recovering the maximum amount possible for the taxpayers from the sale of assets from failed thrifts. In this case, however, Vento contends that the agency’s sales methods--it often relies on bulk sales--make it harder for individuals and smaller firms to buy loans and properties from failed thrifts.

Vento said many newly elected members of the committee are “very unhappy with the RTC--they’re hearing from . . . constituents back home.”

He told reporters that committee members are receiving complaints from contractors having difficulty dealing with the RTC and from business executives and investors frustrated by the RTC’s policy of selling assets in huge, expensive pools.

The House refused last year to approve the $25 billion sought by the Bush Administration to close the final group of insolvent thrifts and cover their losses. House Democrats refused to deliver the votes on the unpopular issue after the White House failed to persuade a majority of House Republicans to approve funding.

Now, even though a Democrat occupies the White House, the vote is no more attractive to Democrats. Vento calls it “paying for dead horses.” Congress must eventually approve the funding because it is needed to make good on the government’s guarantee of S&L; deposits up to $100,000.

But the timing is uncertain, with Vento and other critics pressing hard for major changes at the agency.

The new Administration has not yet made any decisions about funding or policies for the RTC. The estimated price tag for the thrift cleanup is $130 billion. When the cost of 40-year bonds to provide the cleanup funds are included, the ultimate price tag to American taxpayers could reach $500 billion, depending on interest rates.

Casey should be dismissed as head of the RTC because the agency “needs a hands-on manager,” Vento said during a briefing with reporters on a special RTC report he directed. “Just having a celebrity type, a captain of industry, is not enough.” Casey has served as postmaster general and in several major corporate posts.

Casey is “the captain of the ship until relieved of command,” RTC spokesman Stephen Katsanos said. “He came to this job saying he would do it only for two years, and a year of that is gone.”

Casey “would be more than happy to stay for the second year, but he knows he was appointed by a Republican,” Katsanos said. “He is willing to stay until a replacement has been installed by the new President.”

Administration and congressional sources said Casey has been campaigning actively to keep his job, arguing that he wants to lead the RTC as it winds up the S&L; bailout.

The RTC has sold almost $300 billion in assets from insolvent thrifts, including mortgages, securities and real estate, and has $100 billion more remaining in hard-to-sell assets.

Vento distributed a letter he sent to President Clinton complaining of “inefficiencies in virtually every activity conducted by the RTC--resolutions (sales and closings) of institutions, sales of assets, procurement of goods and services, and management systems and information systems.”

The thrift “problems are not over and it is important that your Administration take firm control today to set a new policy path,” Vento wrote.