Magazine article Insight on the News

Savings-and-Loan Bailout: The Bills Keep Coming

Magazine article Insight on the News

Savings-and-Loan Bailout: The Bills Keep Coming

Article excerpt

Last year when no one was watching, Congress and the Clinton administration quietly made sure that an even greater share of the tab for past savings-and-loan fiascoes would be picked up by taxpayers.

The deed was done quickly with no hearings or open debate. In fact, Congress tucked the new bailout into appropriations legislation with a two-paragraph provision, which was pushed forward by industry lobbyists and supported by the White House.

Recently, the first major bill came due when a federal judge ordered the government to pay a record-setting $909 million to Glendale Federal Bank, a California savings association that nearly went bankrupt after Congress and the Bush administration implemented tougher accounting changes about a decade ago. The government plans to appeal.

So far the savings-and-loan mess has cost taxpayers about $165 billion, translating into about $1,650 for each American household. Should the recent ruling hold up, it could set a major legal precedent for some 120 similar cases and add another $30 billion to $50 billion to the costs of the most expensive banking debacle in U. …

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