RTC to Double Ranks of Contract Auditors : Thrifts: ‘Inadequate controls’ on contracts may have cost taxpayers millions for 67-cent photocopies and other overpriced services, the agency’s director says.

Fearful that large amounts of money were wasted by contractors at the Resolution Trust Corp., the Clinton Administration will hire 200 auditors and investigators to double the size of a special contract surveillance unit.

The savings and loan cleanup agency often “frittered away” funds with “inadequate controls on contracts” as it pursued a policy of rushing to sell real estate, mortgages and other assets from failed S&Ls;, according to Deputy Treasury Secretary Roger Altman, who is now running the RTC.

Altman has ordered an abrupt slowdown in the sales pace, sharply reversing the policies of the Bush Administration and former RTC Director Albert V. Casey, who had proposed shutting down the agency this year.

The Clinton Administration is hopeful that its new policies, and an appeal to party loyalty, will persuade the Democratic Congress to approve additional funding for the RTC, something denied last year. The Senate, as expected, voted Thursday to approve $34.3 billion to dispose of insolvent thrifts and provide funds to cover the cost of future failures. The funding was passed by a vote of 65 to 31. The Administration originally asked for $45 billion, but officials said the reduced amount would be adequate.

The big struggle over funding, with a far from certain outcome, will take place later this month in the House, which has 110 freshman members, many of whom are deeply skeptical about voting funds for the unpopular agency. The funding bill has “a 50-50 chance” on the House floor, said one of its supporters and an influential figure in the S&L; debates, Rep. Floyd H. Flake (D-N.Y.), chairman of the oversight subcommittee of the House Banking Committee. “There is some anger” in the House against the RTC, he said in an interview Thursday.

Flake said the decision to hire more people to review RTC contracts “is probably a wise use of funds.”

“We have lost millions of dollars because we had to contract out so much of the services,” Flake said.

“It is better to micro-manage this shop (the RTC) until it closes. Then maybe you won’t get ridiculous things like copying costs at 67 cents a page,” he said, referring to disclosures earlier this year that the RTC had paid that much to copy more than 11 million pages of documents at the failed Homefed Savings Bank in San Diego.

To expand and intensify the scrutiny of contracts, the RTC’s Office of Contractor Oversight and Surveillance will be expanded to 400 personnel from its current staff of 197, Altman disclosed.

This is the only growth area at the RTC--the agency is shrinking, with total employment at 6,324, down from a peak of 8,600 in April of last year.

The additional oversight personnel will enable to agency to focus new attention on getting its money’s worth for the $2.4 billion it spends each year with thousands of businesses, including accountants, lawyers, real estate agents, property managers and repair firms. The RTC has more than 112,000 separate contracts, with more than 100,000 firms on its list of eligible bidders.

At Homefed alone, the RTC has already spent $90 million on professional fees to contractors since taking control of the thrift last July, according to a Homefed internal document obtained by The Times.

“Even in Washington, $90 million is a lot of money,” Altman said. “I’m going to look at it.”

Federal investigators are also checking at Homefed in connection with the disappearance of computers, facsimile machines and other valuable equipment purchased with federal funds for use by contractors working to prepare Homefed’s assets for sale.

Under the Bush Administration, “there was a basic lack of internal controls” at the RTC, Altman said. The agency’s emphasis was on “maximum speed of asset sales . . . with less attention paid to internal management,” he said.

Too often, the RTC would sign a contract and disburse funds without any checking later to assure that the money was well spent, he said.