Newspaper article THE JOURNAL RECORD

S&l 'Worst Cas' to Be Dealt with by Year's End

Newspaper article THE JOURNAL RECORD

S&l 'Worst Cas' to Be Dealt with by Year's End

Article excerpt

NEW YORK - Before year's end, regulators ``will have dealt with the worst cases'' of the troubled savings and loan industry and that with $30 billion more they could tackle the others, the chairman of the Federal Home Loan Bank Board said Tuesday.

However, members of an S&L trade group gave a more somber picture of the industry, sayig that board Chairman M. Danny Wall might be underestimating the cost of removing the 511 insolvent thrifts nationwide.

The National Council of Savings Institutions, which represents about 500 savings banks and S&Ls nationwide, said thrift insolvency was ``one of the most pressing problems today facing the Congress and the federal financial regulatory agencies.''

The group said one solution would be to phase out the Federal Savings and Loan Insurance Corp., which insures desposits of up to $100,000 at the nation's thrifts and is currently in red ink, and use taxpayer money toward the clean-up costs.

In a proposal released last week and outlined again Tuesday, the council said healthy thrifts should be transferred to the more stable Federal Deposit Insurance Corp., the insurer of banks and some S&Ls. Those that failed to meet the FDIC's stiffer capital requirements would have five years to become healthy or shut down.

That was the opposite of recommendations made last week by the largest S&L trade group, the U.S. League of Savings Institutions, which advocated preserving the current system.

Many members of the league, though, are not healthy enough to join the FDIC, which has substantially lower premiums, while about two-thirds of the council's members already are insured by that agency. No thrifts can switch to the FDIC now due to a moratorium imposed by Congress.

FDIC Chairman L. William Seidman was unavailable for comment Tuesday. However, the American Bankers Association, the largest bank trade group, criticized the council's proposal saying the group, ``wants to have its cake and eat it too; They want to leave the problems of their industry behind . …

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