RTC Strategy Aids Small Investors : S&L; bailout: To sweeten latest request for funds, agency relaxes sales policy.
Small investors are going to get a bigger crack at buying real estate and other assets seized in the savings and loan scandal, the S&L; cleanup agency announced Tuesday.
Responding to congressional critics, Deputy Treasury Secretary Roger C. Altman told a news conference that the Resolution Trust Corp. will rely less on grouping assets into large portfolios for sale to Wall Street firms and major investors.
The portfolios were central to the Bush Administration’s cleanup strategy. Bush officials argued such sales returned assets to private hands sooner and reduced the government’s holding costs.
However, congressional offices were flooded with complaints from smaller businesses and investors who said they were being frozen out of bidding on RTC-owned assets.
Altman stepped in as temporary head of the agency after the forced resignation last month of RTC President Albert Casey. He now must persuade Congress to allot an additional $45 billion for the RTC, which has spent $87 billion protecting depositors since its creation in 1989.
As part of the campaign to obtain the funding, Altman has promised new contracting controls and a shift in the sales strategy. He said the new emphasis on individual sales to local investors will bring higher prices.
“In the past, too many small investors have been left out of the RTC bidding process, and too much of the taxpayers’ dollars has been left on the table,” he said.
Under the new policy, all properties will be offered for sale individually for at least 120 days before they are packaged for group sales. The limit on portfolios will be $50 million, down from $400 million.
The targeted buyers will be investors, either individuals or firms, with the capacity, among other qualifications, to purchase real estate at prices of up to $5 million or to make equity investments in joint ventures with the RTC of up to $9 million.
In the first offering, 150 parcels of land and commercial real estate in 26 states, ranging in value from $5,000 to $5 million, will be auctioned by sealed bid in May and June.
The RTC will also sell small investors a new type of security, known as the “S” series.
Altman said the small-investor program should increase the participation of women-owned and minority-owned firms.
The Bush Administration argued that its strategy would allow the government to dismantle the RTC bureaucracy sooner. Altman said the new strategy will not result in appreciable delay.
The agency has sold more than $300 billion in assets and still has $100 billion--the bulk of which are less attractive properties--yet to unload. By law, it must go out of business by Sept. 30, 1996.
