New S&L Outrage

November 05, 1990

Add Rep. Frank Annunzio of Chicago to the list of congressmen responsible for prolonging the savings and loan bailout and costing taxpayers billions of dollars. Mr. Annunzio's display of election-year bravado killed a stopgap rescue measure designed to give the Resolution Trust Corp. enough cash to continue shutting down insolvent thrifts. The result: a long delay that will add $3 billion or more to S&L cleanup expenses.

What makes Mr. Annunzio's action even more unseemly is his history of close family ties to the savings and loan industry, his opposition to bills clamping down on wayward S&Ls, his willingness to promote the cause of an S&L that gave him $12,000 in campaign funds and his efforts to hide these contributions.

As the second-ranking member of the House Banking Committee, the Illinois congressmen did nothing to avert this S&L scandal. Now, faced with the reality of a massive, expensive cleanup of red-ink thrifts, Mr. Annunzio opted to grandstand for the sake of political gain back home -- even though House leaders pleaded with him to relent. This intransigence killed consideration of a measure that would have given the RTC $10 billion to continue its S&L workouts.

Delaying RTC action means that the value of thrift assests will erode and the problem loans will grow more costly. The RTC must postpone the sale of 18 large, failed thrifts with total assets of $30 billion. Instead, Washington will watch as the losses at these S&Ls mount day by day.

We warned two weeks ago of the danger lurking in House's refusal to approve S&L money. Chairman Henry Gonzalez of the Banking Committee balked at moving a bailout bill until he got a chance to question Bush administration officials once more about the S&L debacle. It was a partisan election-year move; not surprisingly, the White House refused to participate. Only at the last minute did Mr. Gonzalez relent to keep the RTC in business.

But then Frank Annunzio, facing the toughest re-election fight of his career, stepped in. He may gain political capital in northwest Chicago, but the cost to U.S. taxpayers will be enormous.

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