President Bush's savings and loan bailout fund will be nearly out of money if officials reach their goal of closing or selling 77 institutions by Sept. 30, a federal agency says.
Figures provided Thursday by the Resolution Trust Corp. Oversight Board indicate that, unless Congress authorizes more borrowing, regulators could have as little as $7.3 billion in borrowing authority left when the new federal fiscal year begins Oct. 1."The bottom line it would cause us to very significantly reduce the pace of resolutions," said Peter Monroe, president of the oversight board.
Congress last year allocated $50 billion to cover S&L losses, and the oversight board estimates that after the 77 resolutions are finished, $37 billion of that will have been used. However, the agency will hit a cash crunch before the $50 billion is exhausted because of legal caps on its short-term borrowing.
In addition to the $7.3 billion, the agency could spend any money it can get by selling repossessed real estate and sour loans inherited from previous S&L bailouts, he said.
If Congress doesn't provide more money before adjourning for the November elections, the government will be forced to slow the pace of the bailout or dramatically increase the pace of asset sales, Monroe said.
So far, the trust corporation has "resolved" the cases of 210 S&Ls, leaving roughly 250 insolvent thrifts open and under government control. At least an additional 250 institutions still under private ownership are expected to fail.
"We're two-sevenths of the way through," Monroe said.
Because money is scarce, officials will concentrate this quarter on closing the S&Ls that are losing money the fastest, he said.