WASHINGTON -- The savings and loan bailout needs an additional $180 billion, Treasury Secretary Nicholas F. Brady told the Senate Banking Committee yesterday, detonating an ugly round of bipartisan complaint and accusation that climaxed with Mr. Brady demanding a personal apology.
For more than an hour, the normally taciturn Treasury secretary sat silent as one senator after another criticized the S&L bailout's escalating costs and the seemingly endless reports of bureaucratic bungling.
Sen. John Kerry, D-Mass., finally ignited Mr. Brady's temper by suggesting that the Reagan administration and Mr. Brady might have deliberately covered up the true depths of the S&L crisis until after the 1988 elections.
Mr. Brady became Treasury secretary in September 1988.
Mr. Kerry openly wondered whether Mr. Bush's expected 1992 re-election campaign might pose a similar cover-up danger.
"I resent, Senator Kerry, your insinuation that we have played politics with this problem," Mr. Brady protested, his voice choked in anger.
Since August 1988, official Treasury estimates of the S&L bailout's total costs have ballooned from less than $20 billion to $160 billion -- and that doesn't include hundreds of billions of dollars for 40 years of interest payments due on the bonds the Treasury sells to finance the bailout.
Including interest brings the total bill to about $500 billion, estimates the General Accounting Office, Congress' auditing agency.
Yesterday, Mr. Brady asked for an additional $80 billion to cover lost S&L deposits, matching the $80 billion Congress has given so far. That money -- up to $160 billion -- will never be recovered, he acknowledged.
In addition, Mr. Brady requested permission to spend up to $100 billion more in "working capital" to buy assets -- such as bad real estate loans -- held by failed thrifts.
The heated exchange between Mr. Brady and Mr. Kerry highlighted the most vituperative hearing the Senate Banking Committee has ever held on the S&L disaster -- an apparent reflection of rising bipartisan political anxiety on Capitol Hill about potential voter retribution for the steadily worsening S&L and banking crises.
Mr. Kerry said the possibility of an S&L cover-up "was a very legitimate question in 1988," because one week after Mr. Bush's election as president, the estimated costs of the S&L bailout jumped "from $15 billion to $50 billion."
"Members of the Treasury said they knew this before the election. . . . And I felt betrayed by that," Mr. Kerry said.
"I resent your comments," Mr. Brady repeated.
"Well, I appreciate that," Mr. Kerry replied. "I think the American people resent the sense of incompetence that they're seeing as this gets bigger and bigger and bigger. And the question is, 'Where is it going to end?' "
"We're going to try to make it work, and we'll continue to do a good job, and we're going to continue to be honest with the American people," Mr. Brady replied.
"But when you sit up there and question my integrity and the members of this board, then I think an apology is in order."
Mr. Kerry refused to apologize.