Congressional Budget Expert Rejects Treasury FSLIC Plea
Treasury Department officials have failed to convince Congress' independent budget expert that a bailout plan for the thrift insurance fund is not a new government expenditure.
The issue is a crucial one, because of an overriding mandate to cut the federal budget.
In a related development, the Federal Home Loan Bank Board has finally signed a contract with the newly chartered Federal Asset Disposition Association, also known as the 406 Corp. The contract opens the way for the association to begin managing the troubled assets that the Federal Savings and Loan Insurance Corp. inherits each time a federally insured thrift fails.
Rudolph Penner, director of the Congressional Budget Office, said in an interview Tuesday that he would not overrule an earlier staff position. He said he continued to view the Treasury-authored plan, which would raise about $15 billion in the bond market for the FSLIC, as an obligation of the federal government.
"I'm going to tell Treasury that the obligation of the government is clear,' Mr. Penner said. The Treasury Department had designed the plan specifically to avoid any …