Newspaper article THE JOURNAL RECORD

Seidman Hopes to Enhance Power over Savings and Loans Bailouts

Newspaper article THE JOURNAL RECORD

Seidman Hopes to Enhance Power over Savings and Loans Bailouts

Article excerpt

WASHINGTON (AP) - Federal Deposit Insurance Corp. Chairman L. William Seidman, who would become the new deposit insurance czar under legislation moving through Congress, is talking to the Treasury Department about an idea that would enhance his power over the savings and loan bailout.

Seidman is angling for greater authority over the Resolution Trust Corp., a new entity that will be created to close or merge insolvent savings and loan institutions and dispose of real estate repossessed by the S&Ls, said a well-informed industry official, speaking on condition of anonymity.

The FDIC chairman is said to be proposing that his own organization's board, rather than a single person, be appointed chief executive officer of the Resolution Trust Corp.

Seidman, in a telephone interview Tuesday, declined to say his agency is advocating the idea, but he described it as ``worth exploring'' and ``feasible.''

``It's not our idea. It came from a suggestion that the GAO (the congressional General Accounting Office) made. We have been talking to Treasury about it,'' he said.

The Resolution Trust Corp., under legislation that passed the House last week and the Senate in April, will have the mammoth task of spending $50 billion in new bailout funds and of handling $300 billion to $500 billion of bad loans and property.

The legislation does not spell out how the Resolution Trust Corp. will be structured beyond the composition of its board, which will be headed by the Treasury secretary, and the fact that it must hire a chief executive officer.

The FDIC is getting the job of insuring savings and loan deposits, in addition to the commercial bank deposits it already guarantees. However, the FDIC's relationship to the Resolution Trust Corp. is left unclear.

Treasury officials have said they envision the Resolution Trust Corp. as an oversight agency, with fewer than 100 employees, which would hire others to do its work. Presumably, the FDIC, because it has already taken over the 221 worst S&Ls and has the largest pool of experienced real estate liquidators in the government, would be the biggest contractor, with private firms also getting pieces of the work. …

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