Federal regulators are proposing the creation of a new agency, possibly drawing money from banks, credit unions and savings institutions, to oversee the clean up of the money-losing savings and loan industry.
The Federal Home Loan Bank Board, which regulates the nation's 3,000 S&Ls, on Monday sent the broad outlines of the proposal to the Treasury Department, which is formulating the incoming Bush administration's plans for dealing with hundreds of insolvent savings institutions, agency spokesman Karl Hoyle said.Bank Board Chairman M. Danny Wall, in a speech to a group called the National Housing Conference, proposed what he called a "reinsurance agency" for all federally insured financial institutions.
On an unrelated topic, Wall also said the bank board is offering to make foreclosed properties from failed savings institutions available to house the homeless in a half dozen cities.
The bank board's insurance fund, the Federal Savings and Loan Insurance Corp., has been paying for a rec-ord number of S&L rescues this year primarily through promissory notes pledging future income from an assessment on still-operating institutions.
Wall has argued previously that the fees paid by S&Ls to the FSLIC, as well as by banks and credit unions to separate insurance funds, were meant to cover a "normal" level of failures, not the "catastrophic" level of the current thrift crisis.
Through Monday, regulators said they have resolved the cases of 159 insolvent thrifts this year. More than 400 insolvent S&Ls remain open and hundreds of others are close to insolvency.