Washington seems increasingly impotent in the face of the mounting savings-and-loan disaster. Edward Yardeni, chief economist at Prudential-Bache Securities, has an apt metaphor for the problem: He says it's growing so fast it reminds him of that old film, "The Blob."
Supposedly, Congress contained the monster last August when it enacted the thrift-bailout bill. Since then, lawmakers have been told that $50 billion more may be needed to tame it. President Bush admitted as much a few days later. "It's a whale of a mess," he said.The disarray is getting worse. In February the president of the Resolution Trust Corp., the entity charged with cleaning up the mess, handed in his resignation after four months on the job. Daniel Kearney complained that the post carried too much responsibility and too little authority. Then his assistant stepped down, telling reporters the RTC's overlapping lines of accountability will create paralysis while permitting top officials to blame everyone else.
Currently, the Blob is generating losses estimated at $9 million a day. The disposal of government-seized thrifts has slowed to a crawl. The number of failing thrifts continues to rise. Many posts in the S&L bureaucracy remain unfilled. Even Bush's appointment this week of a new director of the Office of Thrift Supervision was on a temporary basis.
The original legislation called for borrowing $50 billion through 1991 to cover the costs of closing insolvent thrifts. Over the next decade, lawmakers expected that eradicating the Blob would cost about $166 billion. As usual, the estimates were too low.
One would think that everyone in Washington, regardless of party, would be desperate to contain the S&L mess. If ever there was an equal-opportunity scandal, this is it.