Newspaper article THE JOURNAL RECORD

S&l Bailout Funding Plan Meets Democrat Opposition

Newspaper article THE JOURNAL RECORD

S&l Bailout Funding Plan Meets Democrat Opposition

Article excerpt

WASHINGTON - A Bush administration plan to raise more than the $50 billion Congress approved for the savings and loan bailout and keep it out of the budget deficit is running into opposition from key Democrats.

Sen. Jim Sasser, D-Tenn., chairman of the Senate Budget Committee, and Sen. Donald W. Riegle Jr., D-Mich., chairman of the Banking Committee, say the administration plan would ``put an unnecessary cost burden on the taxpayers'' and ``deeply offend existing concepts of sound budgeting.''

``Moreover, off-budget borrowing. . .would set a dangerous precedent that could easily be replicated by other agencies whether or not it was sanctioned by Congress,'' they told Treasury Secretary Nicholas F. Brady in a letter released late Wednesday.

Leaders of the tax-writing House Ways and Means Committee, including chairman Rep. Dan Rostenkowski, D-Ill., and Rep. Fortney Stark, D-Calif., are also fighting the administration. Stark is sponsoring a bill that would block the plan.

Savings and loan legislation enacted in August provides $50 billion to a new government agency, the Resolution Trust Corp., to close or sell failed thrift institutions through 1991.

However, in testimony this week to the Ways and Means oversight subcommittee, L. William Seidman, chairman of the Resolution Trust, said the agency will need more than the $50 billion as ``working capital.''

He said $50 billion is needed to fill the ``hole'' created by savings and loan losses. Additional working capital, which he said will be ``in excess of $50 billion,'' is needed to finance the carrying of the large portfolio of sour loans and distressed real estate the agency will inherit from failed thrifts.

That adds up to more than $100 billion but, as the Resolution Trust sells the bad loans and real estate, it expects to recover the working capital, leaving the net cost at the original $50 billion. …

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