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U.S. ACCOUNTANTS TELL BUSH TO FIND $68 BILLION MORE FOR S&L BAILOUT

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Congressional auditors warned Friday that last year's savings and loan bailout plan will fall a staggering $68 billion short and called on the Bush administration to come up with a plan to raise the money.

The General Accounting Office, in its highest-yet estimate, said it will cost the government $325 billion to close or sell failed thrift institutions. That's greater than the annual budget of the Defense Department.The new projection is up a sharp 26 percent from a $257 billion estimate the GAO offered only five months ago. And it is based on admittedly optimistic assumptions about interest rates, rescue costs and the number of S&L failures, Comptroller General Charles A. Bowsher, who heads the GAO, told the Senate Banking Committee.

In his testimony, Bowsher called on Treasury Secretary Nicholas F. Brady and Federal Deposit Insurance Corp. Chairman L. William Seidman, who is administering the bailout, to "develop proposals to provide the additional funds."

In past appearances before congressional committees, Seidman has conceded that last year's bailout probably is underfunded. The administration, however, has suggested it could get by through early appropriation of about $30 billion intended for S&L failures after 1992. The GAO's figures challenge that.

The administration had planned to spend $50 billion to cover losses in S&Ls that fail through 1992, but Bowsher said it will need at least $13 billion more.

The GAO chief said the government also will have to spend $5 billion more than anticipated on interest to borrow the $50 billion; $10 billion more for administrative expenses at the bailout agency, the Resolution Trust Corp.; and $28 billion more for interest on money the RTC is borrowing until it can sell the assets from failed thrifts.

Bowsher blamed the shortfall, in part, on the government's slow start in closing and selling failed S&Ls.