House Ways and Means Chairman Dan Rostenkowski, D-Ill., told the nation's mayors not to expect money from a "peace dividend" because it is going toward bailing out the troubled savings and loan industry.
Addressing the U.S. Conference of Mayors on Monday, Rostenkowski said the savings from democratic reforms in the Soviet Union and Eastern Europe "has already been invested in the savings and loans."The mayors had been hoping to tap into a peace dividend and planned to call on the federal government to provide more funds for the nation's cities.
Deregulation of the thrift industry led to unsafe lending practices in the 1980s and the collapse of hundreds of thrifts. Congress already has appropriated billions of dollars to pay for a bailout of the industry and estimates of losses range in the hundreds of billions.
Chicago Mayor Richard Daley said a major investigation should have been conducted before any federal money is pledged to a bailout.
"It makes everybody angry, not just big-city mayors," Daley said. "I would have never bailed them out."
"It's outrageous to think that all that money has been usurped from any use by the cities and towns where I think it rightfully belongs," Springfield, Mass., Mayor Mary Hurley said following Rostenkowski's speech.